Lufthansa: Yes to More Taxes, Maybe to Higher Fares

Lufthansa’s recent press release is a bit weird. It makes the point that the new European carbon emission taxes will add something like €130 million (about $170 million) to its operating costs in 2012. Lufthansa will recover the costs through higher prices, says the line, and will include those costs in its existing fuel surcharge, but it has no plans to increase the surcharge at the present time. Huh? “We’ll cover the costs by raising prices but we won’t increase fares?”

Clearly, what’s really happening is that Lufthansa and all other lines flying to/from/within Europe will have to pay more taxes in the form of emission levies. And whether those taxes are for a supposedly beneficial result or not really don’t matter; in the long run, fares will have to go up. But any such increase is likely to be lost in the day-to-day competitive fare adjustments that are always occurring in the marketplace, so you won’t notice it much, if at all.

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This new European tax is essentially a done deal. Quite a few airlines are challenging it, but the Europeans seem to have the authority to tax airlines, and that’s what they seem to want to do. Get used to it.

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