Lufthansa Group on the logic behind its climate protection green tax

Lufthansa Group’s decision to implement an environmental surcharge has received mixed reactions from passengers. But group executives see the move as a “logical” way to address the rising cost of adhering to European Union regulations to combat climate change, and have thus opted for a “transparent” approach to help passengers plan accordingly.

The environmental surcharge, or ‘green tax’ as some are calling it, went into effect on 26 June and is valid for travel as of 1 January 2025 on all Lufthansa Group carriers departing from the 27 EU countries as well as the UK, Norway and Switzerland. The surcharge varies depending on the flight route and fare and is between EUR 1 and EUR 72.

“It’s something that we feel is the right step actually to deal with the regulatory obligations that we have as of the 1st of January. And so, we feel this is a transparent way to make this also known and make it transparent to our customers,” Lufthansa Group Airlines vice president sales, The Americas, Dirk Janzen told Runway Girl Network on 1 July in Boston, where company executives joined local dignitaries to celebrate Austrian Airlines’ inaugural service to Boston Logan from Vienna.

Against a backdrop that sees climate change driving more severe weather events, and indeed leading to more severe air turbulence, Janzen noted that the response from customers to Lufthansa Group’s environmental surcharge has not been all negative.

“We get also very positive feedback actually for that step — that we make it transparent,” he said.

Lufthansa Group carriers include Lufthansa, SWISS, Austrian Airlines, Eurowings, Brussels Airlines, Lufthansa City Airlines, Discover Airlines and Edelweiss Air.

The surcharge is intended to cover part of the rising costs associated with adhering to various regulatory environmental requirements, including the EU’s “Fit for 55” greenhouse gas emissions reduction program, which will require operators to incorporate a two percent Sustainable Aviation Fuel (SAF) blend for departures from EU countries from 1 January 2025. This SAF blending quota will steadily increase over the coming years, rising to 6% from 2030, 20% from 2035 and 70% from 2050. “For the Lufthansa Group, this will lead to additional costs in the billions in the future,” the group warned in a statement last month.

SAF is still substantially more expensive than conventional jet fuel which is based on petroleum-derived hydrocarbons. And today, SAF represents less than 0.05% of total EU aviation fuel use, according to Ricardo, the global environmental consultancy that has just been been tapped by the European Union Aviation Safety Agency (EASA) to lead a consortium in implementing Europe’s first ever SAF clearing house.

Lufthansa Group’s Janzen noted to RGN in Boston that the 2% SAF blend requirement taking effect on 1 January affects all airlines leaving Europe. “It’s not a Lufthansa or Germany [specific law.] It’s for all airlines leaving Europe. They have to fulfill that obligation.”

He would not speculate on how other carriers might handle the increased cost of using more SAF, saying:

I cannot comment on that what other airlines are thinking. But for us it was the right step to do it as early as possible to give also the possibility to plan on the consumer side, on our customer side. But everybody else will have to make their own decisions.

Recent adjustments to the EU Emissions Trading System (EU ETS) — a cap and trade system covering all flights within the European Economic Area, and for which Lufthansa has been a participant since 2012 — plus obligations under the global offsetting scheme CORSIA are also factoring into Lufthansa Group’s decision to levy the environmental surcharge.

“In addition to kerosene tax, the EU ETS” is among the “many many things that are actually upcoming as of next year, which at the end ultimately will raise the environmental cost,” Austrian Airlines chief commercial officer Michael Trestl told RGN in Boston.

“And I think it’s just the logical next step also to introduce such an environmental cost contribution like we did because those costs have also to be born at the end of the day and this is where we are heading at this moment.”

Will SAF be the number one way that airlines can achieve Net Zero by 2050?

“It’s a bundle of different things,” says Trestl. “Of course, on the one hand side, it’s a technological advancement of fleet and fleet efficiency, like for example if you are comparing a 787, new latest technology aircraft, it uses 20% less fuel and produces 20% less CO2 emissions. So of course, new technology, engine technology, aircraft technology is one aspect. Secondly, it’s operational efficiency. We need to fly more efficient. We need to fly, especially in Europe, with more let’s say streamlined air traffic management which can foster direct access and direct routes that reduce also CO2 emissions.”

“But”, he added, “sustainable aviation fuel will of course be one of the key success factors [in] how we can achieve the Net Zero by 2050 because without this, it will simply not work to achieve our goals.”

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