Lufthansa Adds Environmental Charge to Cover Emissions Costs

Lufthansa will introduce an environmental charge to its fares, aiming to offset the cost of new EU emissions regulations. The charge, ranging from 1 to 72 euros depending on the ticket type, is expected to help cover the expense of sustainable aviation fuel. Ticket prices have already surged post-COVID.

Lufthansa will add an environmental charge to its fares, the airline said on Tuesday, joining at least one European rival in doing so as the industry battles to cover the cost of meeting 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 travellers from flying. Fares will go up between 1 euro and 72 euros ($1.07-$77.24), depending on the type of ticket, on all flights departing from European Union countries, Britain, Norway and Switzerland, the German airline group said in a statement.

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. The EU has adopted rules requiring flights departing from member states' airports to carry progressively increasing amounts of SAF.

Air France-KLM introduced a similar charge in January 2022, the group confirmed to Reuters, adding a surcharge of up to 12 euros for business fares and four euros for economy fares at the time. "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.

COST WARNINGS 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, the company said. Lufthansa shares hit an intraday low after the news and were down 0.4% at 1105 GMT.

A spokesperson said the move was not tied to Lufthansa's high labour costs after strikes this year, which led the airline to issue a profit warning ahead of first quarter results. He added the additional costs weren't expected to go up further for now.

EasyJet, Ryanair and IAG were not immediately available to comment on whether they would introduce similar measures. IAG shares were down 1.4% at 1105 GMT, while budget carrier Ryanair's extended gains after the news to trade up 1.4%.

($1 = 0.9321 euros) (Additional reporting by Paolo Laudani and Ilona Wissenbach; Editing by Madeline Chambers and Mark Potter)

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