Lufthansa to raise fares as environmental costs increase
Lufthansa will add an environmental charge of up to €72 ($77) to its fares, the airline group said on Tuesday, joining at least one European rival in doing so as the industry battles to cover the cost of 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 travel boom, raising fears that further increases could start deterring travelers 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 for departures starting from Jan. 1, 2025 onwards.
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.
Aviation is deemed responsible for about 2% of the world's emissions but is considered one of the hardest sectors to decarbonize as fuel for flights cannot be easily replaced with other kinds of power.
Ripple effects. European regulators introduced rules that ask fuel suppliers to ensure 2% of fuel at EU airports is SAF by 2025, rising to 6% in 2030 and 70% 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 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 emailed statement.
British carrier easyJet, which has focused much of its environmental strategy on carbon reductions using hydrogen technology, said it wasn't planning on following in Lufthansa's footsteps.
"We don't apply legacy carrier surcharges and have no plans to do so," an easyJet spokesperson said.
Cost warnings. Singapore’s government has also introduced a levy on flight tickets earlier this year to help fund the additional cost of SAF.
Lufthansa CEO Carsten Spohr warned last year 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 labor costs after strikes this year, which led the airline to issue a profit warning ahead of 1Q results. He added the additional costs weren't expected to go up further for now.
($1 = €0.932)
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