Higher Flight Costs Coming in Germany to Curb Emissions

William Wilkes, Brian Parkin and Arne Delfs

(Bloomberg) -- Germany’s main political parties are coalescing around proposals to increase the cost of flying, potentially doubling the tax on short-haul flights to slash greenhouse gas pollution.

Alarmed that the country is falling short of emissions-reductions pledges it made under the Paris Agreement on climate change, Chancellor Angela Merkel’s Christian Democrats are drawing up policies with their Social Democrat coalition partners and focusing on air transport for some of the most dramatic reductions.

A proposal by Merkel’s CDU to double levies on domestic flights was announced by the party’s finance expert, Andreas Jung, in a press conference in Berlin. They’re part of a broader package that ministers are due to consider at a Sept. 20 meeting of Merkel’s cabinet meeting dealing with climate policies.

“We want a doubling of the ticket tax for domestic flights which would build on the current regulation,” Jung said. “And in the current regulation, feeder flights are exempt. This exemption would be continued.”

Endorsing the policy on aviation would add to momentum within Europe to hit the aviation industry with stricter emissions rules. The French government in July unveiled taxes of as much as 18 euros on flights departing from France, sending airline shares lower.

Germany’s BDL industry group which represents the nation’s airlines isn’t happy with a “go-it-alone-in-Europe” proposal. “We doubt it will dent emissions at all -- we need an international approach that tackles CO2 output directly,” said BDL spokesman Ivo Rzegotta in Berlin.

The levy on flights currently starts at 7 euros ($7.70) per seat and rises to as much as 40 euros with the distance traveled.

“We want to double the existing ticket tax of 7.40 euro for domestic flights,” Jung said. “The previous plan for short domestic flights is no longer in the proposal, so that there will only be a doubling of ticket taxes.”

The ambition is for ticket prices to more accurately reflect the environmental cost of flying compared to train travel and to make those choices more transparent to consumers. Some of the measures were first reported by local media.

Olaf Scholz, the government’s finance minister and a lawmaker from the Social Democrat Party, said in an interview with Germany’s Bild Zeitung that he favors increasing taxes on airplane tickets.

“This we want to increase,” Scholz said in an interview with Germany’s Bild newspaper. “That is, technically speaking, the cleanest solution.”

The move could alter the competitive landscape between Germany’s national carrier Deutsche Lufthansa AG and the low cost carriers Ryanair Holdings Plc and Easyjet Plc. Earlier this summer, Lufthansa Chief Executive Officer Carsten Spohr blasted his rivals for offering tickets as low as 10 euros each, saying prices that low are economically and ecologically irresponsible.

Analysts have said Lufthansa would likely benefit from an increase in the cost of flying. The introduction of Germany’s first ticket taxes in 2011 forced Ryanair to retreat from the German market, with Lufthansa increasing its market share at the Irish carrier’s expense.

While new passenger jet aircraft are more fuel efficient, pollution from the industry are rising as more people chose to fly. Carbon emissions from Lufthansa and Ryanair rose to a record last year as passenger volumes increased -- even though they both made fuel efficiency gains by using newer jets, sustainability reports from both companies showed.

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To contact the reporters on this story: William Wilkes in Frankfurt at wwilkes1@bloomberg.net;Brian Parkin in Berlin at bparkin@bloomberg.net;Arne Delfs in Berlin at adelfs@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Raymond Colitt

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