Lufthansa and Ryanair unite in call for abolition of German aviation tax
Lufthansa has criticised Germany for its "excessive government levies", which make the country "unattractive" for aviation.
Further, Ryanair has blamed Germany's lagging air traffic recovery on "high access costs (air traffic tax, security fees, air traffic control fees) and airport charges".
Airline seat capacity in Germany is scheduled to reach only 87% of 2019 levels in 2024, compared with 102% for Europe as a whole. Germany is the only one of Europe's five biggest markets not to exceed 2019 capacity levels in 2024.
It is rare for Lufthansa and Ryanair to agree, but both have welcomed Sweden's decision to abolish aviation tax, and have urged Germany to follow suit.
- Germany seat capacity is only 87% of 2019 this year, the lowest of Europe's big five markets. Germany was second in Europe in 2019, but is now third.
- Government charges in Germany are higher than elsewhere in Europe and aviation tax is "a considerable competitive disadvantage", according to Lufthansa.
- LCC seat share is low in Germany and has fallen since 2019 on both international and domestic routes. Ryanair "has switched to other lower cost EU countries".
- Germany's low capacity recovery from the pandemic reflects low LCC seat share.
Germany seat capacity is only 87% of 2019 capacity in 2024 - the lowest of Europe's big five markets
In its Sep-2024 'Policy Brief' report Lufthansa Group noted that "air traffic is growing - except in Germany."
Capacity figures from CAPA - Centre for Aviation and OAG support this.
Airline seat capacity in Germany in 2024 is scheduled to be at only 87% of its 2019 level; this is the lowest among the leading airline markets of Europe.
Italy is scheduled to be at 115% of 2019 seats in 2024, with Spain at 114%, the UK at 102%, and France at 101%. Europe as a whole is projected at 102%.
Europe's leading aviation markets: 2024 annual seats as a percentage of 2019 seats
Germany was number two in Europe in 2019, but is now number three
In 2019 Germany was Europe's number two aviation market by seats and only 12% smaller than the number one market (the UK).
In 2024 Germany is the number three market, 26% smaller than the UK and 17% smaller than Spain.
Italy, which was fifth, and 33% smaller than Germany in 2019, is fourth, and 11% smaller than Germany in 2024.
Europe: top 5 countries ranked by annual seats, 2012 to 2024*
Lufthansa: increased aviation charges have 'serious' effects
Lufthansa Group's Sep-2024 'Policy Brief' said that aviation security levies, air traffic control charges, and aviation tax had almost doubled since 2020.
The group described the effects as serious: "The number of European and, in particular, domestic German connections has declined significantly. Low-cost airlines are increasingly leaving German airports."
It expressed concerns about the impact on the economy of German regions that are leaking air traffic to neighbouring countries with lower charges.
"Important economic regions are at risk of being left behind. Traffic and value creation are shifting abroad."
Government charges in Germany are higher than in other European countries…
As an example, it said that an A320 flight to Barcelona from Dresden pays EUR4,200 in aviation tax, security and ATC charges, whereas a flight from Prague pays around EUR540.
As a consequence, "...more and more passengers from the Dresden region are deciding to travel to Prague to start their flight".
A chart published by Lufthansa (quoting data from BDL and DLR) compares "governmental location costs" for an Airbus A320 with 150 passengers at four German airports with five airports elsewhere in Europe.
Charges at the four German airports (Berlin, Munich, Duesseldorf and Frankfurt) were all well in excess of EUR4,000, whereas those at the other European airports varied from EUR522 (at Istanbul) to EUR3,715 (at Vienna).
Governmental location costs in comparison (A320 with 150 pax, May-2024)
…with aviation tax 'a considerable competitive disadvantage'
Since other EU member states have either no aviation tax, or "significantly lower" aviation taxes, Lufthansa Group argued that the German levy "leads to a considerable competitive disadvantage" for Germany.
It noted that Denmark had abolished aviation tax 15 years ago, since when its domestic market has "grown strongly".
By contrast, Germany has "massively raised" its levy since the COVID-19 pandemic, citing a 71% increase for long and medium haul flights and 111% for short haul.
Sweden will abolish aviation tax from Jul-2025
Scandinavia's largest country, Sweden, will abolish its aviation tax from Jul-2025.
Lufthansa Group noted that "the decision is already having an impact", with Ryanair planning to increase capacity from the middle of next year (2025).
The group called on the German government to follow Sweden's example.
Ryanair has welcomed the Swedish government's decision. The airline has announced that it will add 10 new routes to its network there and increase its fleet based in Sweden from six to eight.
LCC seat share is low in Germany…
Lufthansa's Policy Brief echoed comments earlier this year by the German Aviation Association, BDL.
As a consequence of the near doubling of government fees for air traffic in Germany, BDL said that European "point-to-point airlines in particular are avoiding German airports".
"Point-to-point airlines" primarily means low cost airlines, and it is true that the penetration of LCCs in Germany is low compared with other leading European countries (and Europe has a whole).
According to data from CAPA - Centre for Aviation and OAG, low cost airlines account for 34.2% of seats in Germany in the week of 30-Sep-2024.
This compares with a share of 45.5% for LCCs across all of Europe.
…and has fallen since 2019 on both international and domestic routes
For the first 10 months of 2024, low cost seat share in Germany is 33.3% on international routes and just 18.2% on domestic routes.
In both cases this is below 2019 full-year levels, when LCC seat share was 34.3% on international routes and as high as 40.0% on domestic routes.
However, while LCC share has oscillated around a similar level since 2017, it has fallen dramatically on domestic routes since 2019, after climbing sharply from 2014 to 2018.
Germany: low cost airline seat share 2014 to 2024*
Ryanair 'has switched to other lower cost EU countries'
Ryanair, the leading airline in Germany that is not part of the Lufthansa Group, said on 23-Sep-2024 that Germany's traffic level in Aug-2024 had been only 87% of 2019 levels.
The Irish ultra-LCC reported that traffic levels at three "high-cost" German airports were even lower: 72% of 2019 in Berlin, 84% in Frankfurt, and 86% in Munich.
It said that it had grounded 20% of its traffic at Berlin (750,000 seats, six routes and two based aircraft), due to the "horrendous costs".
Ryanair "has switched to other lower cost EU countries, such as Italy, Poland and Spain, with lower, or no, air travel taxes".
Germany's low capacity recovery from the COVID-19 pandemic reflects low LCC seat share
In most of Europe the capacity recovery from the COVID-19 pandemic has been led by low cost airlines.
Germany's recovery is lagging, in no small part because it has a low LCC seat share.
The chart below is a scatter plot of LCC seat share (on the horizontal axis) against market capacity in 2024 as a percentage of 2019 (on the vertical axis) in the five largest European markets, for both international and domestic routes.
In both international and domestic markets, Germany has the lowest LCC seat share and also the lowest recovery of capacity as a percentage of 2019 levels.
At the other end, Spain and Italy have the highest LCC seat shares and recovery levels (particularly in international markets).
Europe's top five aviation markets: LCC seat share in 2024* vs market capacity in 2024 as a percentage of 2019
Lufthansa Group and Ryanair have found common ground - for once
Unusually, Lufthansa Group and Ryanair have found common ground over an issue of mutual importance. Both are highlighting Germany's lagging aviation recovery and calling for a reduction in government charges.
It is particularly revealing that Lufthansa Group pointed to Ryanair's decision to increase capacity in Sweden in response to the abolition of aviation tax there, citing this as a positive outcome.
Germany's high-cost environment has suppressed LCC seat share, and it might be supposed that Lufthansa benefits from lower levels of LCC competition.
However, Lufthansa calculates that increased LCC competition would be a price worth paying to reduce the cost burden that it carries, and to improve overall demand for aviation by lowering government levies on aviation in Germany.