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Does Lufthansa think we’re stupid? Another attempt to unbundle a normal cost of them doing business into a new type of non-optional service fee. Behind the front of virtue signalling, of course.
Who does Lufthansa think they’re kidding?
Just received the following email from them :
“Introduction of an Environmental Cost Surcharge
“Effective 26 June 2024 (date of ticket issuance), the airlines of the Lufthansa Group will introduce a new surcharge for all flights departing from any country of the European Union, Great Britain, Norway and Switzerland on/after 1 January 2025.
“The Environmental Cost Surcharge applies to Austrian Airlines / Brussels Airlines / Eurowings / Lufthansa / SWISS / Air Dolomiti / Discover Airlines / Edelweiss / Lufthansa City Airlines / Lufthansa CityLine flights.
“The surcharge is automatically calculated and included when the ticket is issued.
“The surcharge covers additional costs from legislative environmental regulations such as the SAF (Sustainable Aviation Fuel) mandate by the European Union (“ReFuelEU Aviation”), adaptations of the European ETS (“Emission Trading System”) scheme and other regulatory costs.
Yours sincerely
Your LUFTHANSA PartnerPlusBenefit team”PS Funny how the UK is included in Europe, when they want to use European requirements of doing business as an excuse for a new type of fee and a price creep.
What’s ‘sneaky’ or ‘virtue signalling’ about this? The airline is being totally up front about the issue – new legislation is going to increase its costs and they expect passengers to contribute to such new costs. These new burdens are not part of the normal operating costs and anyone running a business with responsibility to all stakeholders (including, but not exclusively shareholders) will know that there’s a limit as to what can be absorbed.
It’s sensible to break this out as part of the ticket cost (as it is on our utility bills) so consumers understand that green initiatives cost money and that it gives yet further advantage to airlines based outside Europe.
It’s a normal cost of doing the business that they do.
When the Victorians introduced flush toilets and mains drainage, did every hotel add a flush toilet charge that could then have its own life and go up separately?
Legislation and standards of business evolve. Businesses adapt as part of doing business in the business that they’re in.
Honest businesses that take responsibility for whatever becomes needed in their business to do their business, don’t send out whining emails having invented a new unbundled on-cost for every development in their industry. They price holistically and take profit where the market lets them. They don’t snivel using it as an excuse for trying to load this as a separated charge onto clients whilst signalling how virtuous they are.
Really I’m insulted by Lufthansa taking us for fools.
This is from an airline that bought new Boeing’s four engined gas guzziling environmental impactful 747-8i aircraft, you really have to LOL.
Sorry LL but it’s foolish to let it anger you so much.
You can’t escape the fee and even allowing that’s the wording is a bit cack handed it’s better than them just putting up fares with no explanation.
As long as the total price is disclosed up front and made obvious I don’t really care (from a passenger point of view) about how the money I pay is allocated (though as JDB suggests, I may care from a political point of view).
If competitive pressures exist with non-European airlines, Lufty will on average have to reduce their so-called base fares and carrier surcharges by the amount of this new fee
So this measure punishes customers without affecting LH’s bottom line, implies the responsibility for climate change is on the consumer AND people here clap like seals for it? Won’t be long before we have to start paying their alcohol duty. JDB would no doubt be delighted.
It’s also a bit like water rates, which used to be included in the general rates (ie community charge/local taxes). Any fool with an eye could see that once the water cost was split out seprately it would have a life of its own and go up massively into the future.
Even having worked this out and predicted this, at the time it was mooted we had no idea how bad the newly proposed separated extra water charge would get to be. In terms of pricing, in particular.
At that time I hadn’t done my degree and wasn’t yet working in the City otherwise I might have worked out the stream of infrasructure income for Water was being picked out and fattened like a goose for privatisation.
And thus we now have sky high water charges as well as some pretty high community charges. And it seems the water charges have mostly disappeared into investors’ pockets and we literally have $h1t in our water and rivers because the ripoff contracts the privatised-profit water companies got away with failed to include the insistence on capital investment and to restrict the debt loadings whilst massive profits have been paid out in various different forms to management, investors and others in financial circles, by the water companies.
Relevant to this Lufthana virtue-signalling money grab as even the Australians have picked this up and its likely evolution as ridiculous to put onto customers as a separate item this morning
https://www.executivetraveller.com/news/lufthansa-green-tax-airfare-ticketRead the percentages in one of the later paragraphs and see the responsibility Lufthansa is not taking for its business whilst whining and virtue signalling.
Unless Lufthansa also want to break out the massive dollop of non-cost based dynamic pricing margin — which for many fares will be an order of magnitude higher than the per seat operating cost — I’d call this out as unjustified and borderline deceptive.
I see it as not that functionally different from listing Air Passenger Duty. It’s just a business saying “Hey customer, your government takes this bit of the fare from us.”
There could be a transparency problem if revenues from the fee and taxes paid are not disclosed of course. Depending upon the requirements of the legislation, it may be possible to charge €1.00, pay €0.50 in tax and pocket the other half in margin.
I remember RyanAir being very upfront about what they thought about government tax by renaming the fees you saw online.
I see it as not that functionally different from listing Air Passenger Duty.
But it is. There is no per-seat or per-passenger levy for the items Lufthansa mention as far as I know. APD is a per ticket tax, pure and simple.
You might as well start adding a surcharge for “corporation tax” or “mandatory employee health benefits” etc etc.
I see it as not that functionally different from listing Air Passenger Duty.
But it is. There is no per-seat or per-passenger levy for the items Lufthansa mention as far as I know. APD is a per ticket tax, pure and simple.
You might as well start adding a surcharge for “corporation tax” or “mandatory employee health benefits” etc etc.
@memesweeper – indeed it’s not an identifiable disbursement, but isn’t it it a good thing that Lufthansa is at least up front about it rather than just increasing ticket costs to maintain its margins, something the passenger may not like but then the airline has fiduciary responsibilities towards its shareholders to consider as well.I think it’s very useful also that Lufthansa does it this way to maintain a public debate. Voters all over the world are shouting at politicians to do more about the environment but these policies have a significant cost and that cost absolutely must be part of the debate.
@JDB I am cynical and therefore generally distrust the motives behind this move. The wording suggests that Lufthansa is alone in facing additional new regulatory costs related to environmental concerns but it affects all airlines departing the EU. So my concern is that if Lufthansa is doing this then it will eventually be adopted by all airlines.
The argument against these EU regulations is that it is expensive for airlines to implement and that it will increase the cost of airfares but by implementing the surcharge that is exactly what has happened. But that doesn’t justify the argument.
And bear in mind this is only the start. The targets for SAF content will increase. The trouble is that there’s not enough EU production to meet the current 2% target, let alone any future increases. So i predict the surcharges going up at each new target.
Also, how much does the surcharge takes account of the approximately two billion euros in funding from the EU carbon market airlines will receive to assist with the transition? Or has Lufthansa decided to pocket their subsidy and charge their full costs on top?
The idea behind the regulations is to make air travel better for the evironment and also boost investment in SAF production which will help make it cheaper. So that suggests that the surcharges should eventually be removed. But will they? I doubt it.
Also I don’t buy this argument that this is additional expense for the airlines. Airlines encounter additional costs all the time. New aircraft are also expensive – will Lufthansa add on a surcharge towards the cost of their replacement?
@AJA the difference is that an airline can chose to buy planes or not but can’t chose not to apply government imposed taxes, charges and levies etc.
Thing is, the airlines can add any made up charges that they like. They still have to show the overall price of the ticket, including the magical elephant surcharge, on the search engines rather than adding the extra charges only on the final step of the checkout, so they can either lower their overall ticket price or appear on page 2 of the search results.
You’re all smoking something if you think Lufty won’t pass it on to the customer. Either tickets are just going up or they can be really clear and add it as a clear surcharge, which probably means they can add to redemption flights too.
These are for profit organisations not charities they have a target margin and will strive to make it. You as a customer have the choice to pay the very transparent ticket price or go elsewhere
@BA Flyer IHG Stayer you say
“the difference is that an airline can chose to buy planes or not but can’t chose not to apply government imposed taxes, charges and levies etc.”But the levies are designed to make the airline business more environmentally friendly which is what buying new more efficient aircraft does as well. Ultimately they benefit everyone.
So the argument for surcharges for government levies appears to be anything that is not decided by the airlines should be an additional cost to the consumer but anything the airlines do is just a cost of doing business.
In reality every cost is a cost of doing business. I fail to understand why some elements of doing business need to be charged separately – fuel is necessary to fly a plane whether it contains 2% or 20% of SAF.
Did you agree with BA when it separately added fuel surcharges to airfares when the price rose on a short period of time? Ultimately those surcharges got absorbed into the YQ element (and hence profit margin) of other fees the airlines charge.
Has YQ ever gone down? Of course not.
And now we know JDB is heavily invested in the water industry 🙂
Has YQ ever gone down? Of course not.
And now we know JDB is heavily invested in the water industry 🙂
It doesn’t really matter whether YQ has gone up or down. It’s just part of the total fare which some airlines separate out explicitly whereas others effectively hide it. It’s a very valuable tool for BA as it’s so much easier to flex YQ than the basic fare and it can be very specifically targeted. For redemptions, really it’s the same pattern – some airlines have low surcharges but high points requirements and/or limited availability. BA decided to tuck some of the YQ into RFS and simultaneously upped the Avios required. Virgin has a lower points price but higher cash element. BA/VS reward pricing comes to roughly the same, it’s just the makeup. YQ is a popular source of bleating, but it’s not going away and it is there one way or another, hidden or out in the open.
PS not sure why you might think I would wish to invest in the UK water industry?? Awful sector with horrendous capex requirements and no real property value increase angle. I do like some infrastructure investments, but much more interested in growing businesses, not asset stripping/financial engineering.
Luis Gallego, IAG CEO, in today’s FT talking about European airlines being forced to raise prices to fund the cost of cutting carbon emissions, including the SAF requirements – says IAG airlines used 12% of last year’s available SAF. He talks also more generally about European airlines becoming less competitive as a result of the EU’s net zero targets. Hoping for Air Europa clearance after LH getting ITA clearance. A South American acquisition and TAP mentioned as well.
There’s definitely something a bit wonky about this as the original e-mail includes a valuable footnote….
** Surcharge does not apply to Eurowings flights that are booked on eurowings.com
So the question I have is simply if this is a recovery of an EU levied cost, why is there a carveout for EW flights booked directly on the EW site?
@JDB he can keep hoping.
The issue the EU Competition authorities have with the Air Europa acquisition is the very limited domestic competition on intra Spain flights which will essentially vanish should the take over happen – which isn’t the same as the Italian market.
There’s definitely something a bit wonky about this as the original e-mail includes a valuable footnote….
** Surcharge does not apply to Eurowings flights that are booked on eurowings.com
So the question I have is simply if this is a recovery of an EU levied cost, why is there a carveout for EW flights booked directly on the EW site?
Eurowings was carved out because of legal action tangentially related to these surcharges.
@JDB he can keep hoping.
The issue the EU Competition authorities have with the Air Europa acquisition is the very limited domestic competition on intra Spain flights which will essentially vanish should the take over happen – which isn’t the same as the Italian market.
The problem is that Air Europa is essentially bust, currently surviving on a loan provided by IAG and the shareholders are anxious to sell. There’s therefore an element of the lesser of the evils. The imposition of remedies gives more control to the competition authorities than a messy, free for all corporate failure.
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