Lufthansa to raise fares by up to $104 as environmental costs increase
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Fares will go up between €1 and €72, depending on the type of ticket, on all flights departing from EU countries, Britain, Norway and Switzerland.
PHOTO: REUTERS
FRANKFURT - Lufthansa will add an environmental charge of up to €72 (S$104.40) to its fares, the airline group said on June 25, joining at least one European rival in doing so as the industry battles to cover the cost of meeting new EU rules on reducing emissions.
Airlines have warned for years that regulations requiring them to use more expensive sustainable jet fuel could drive up costs.
Ticket prices have already surged in recent years in the post-Covid-19 travel boom, raising fears that further increases could start deterring travellers from flying.
Fares will go up between €1 and €72, depending on the type of ticket, on all flights departing from European Union countries, Britain, Norway and Switzerland, the German airline group said.
Some of the increases are effective from June 26 and others from 2025.
It said the charge would “cover part of the steadily rising additional costs due to regulatory environmental requirements” such as sustainable aviation fuel (SAF) made from bio-based materials – regarded as crucial to making flying less polluting.
Lufthansa shares hit an intraday low after the news and were last down 0.96 per cent at 1343 GMT.
Aviation is deemed responsible for about 2 per cent of the world’s emissions but is considered one of the hardest sectors to decarbonise as fuel for flights cannot be easily replaced with other kinds of power.
European regulators introduced rules that ask fuel suppliers to ensure 2 per cent of fuel at EU airports is SAF by 2025, rising to 6 per cent in 2030 and 70 per cent in 2050, with many arguing these measures will increase costs for the sector.
“I think it is logical to assume that other airlines will follow Lufthansa’s lead as it looks to pass on the increasing cost of environmental regulations in the EU,” said Mr Dudley Shanley, an analyst at Goodbody.
Air France-KLM imposed an SAF contribution charge in January 2022, it said, adding up to €12 on business fares and up to €4 on economy fares at the time.
It is now considering broadly similar measures to Lufthansa, a person familiar with the matter said, indicating a charge that could be higher.
“We have a SAF contribution in place, applicable to all flights (not only on departure from Europe) to transparently reflect the additional cost of incorporating sustainable aviation fuel,” an Air France-KLM spokesperson said in an e-mailed statement.
British carrier easyJet, which has focused much of its environmental strategy on carbon reductions using hydrogen technology, said it was not planning on following in Lufthansa’s footsteps.
“We don’t apply legacy carrier surcharges and have no plans to do so,” an easyJet spokesperson told Reuters.
British Airways owner IAG, Ryanair and Wizz Air were not immediately available to comment on whether they would introduce similar measures to Lufthansa.
IAG shares were down 1.8 per cent at 1343 GMT, while budget carrier Ryanair’s extended gains after the news to trade up 1.3 per cent.
Singapore’s government also introduced a levy on flight tickets
Lufthansa CEO Carsten Spohr warned in 2023 the EU targets would be hard to achieve and hinted that higher costs would be passed on to customers.
The price hike, which the airline called an “Environmental Cost Surcharge”, will cover part of these costs for 2025 and will apply for all airlines in the Lufthansa group except for Eurowings tickets sold directly by the company, a spokesperson said.
On short and medium-haul flights, the fares will go up by up to €5 in economy and €7 for business class.
On long-haul flights, the costs will go up between €18 and €36 for business fares and up to €72 for first class fares from 2025, Lufthansa confirmed to Reuters.
A spokesperson said the move was not tied to Lufthansa’s high labour costs after strikes in 2024, which led the airline to issue a profit warning ahead of first-quarter results.
He added the additional costs were not expected to go up further for now. REUTERS
