Key Takeaways
The Lufthansa Group of airlines has implemented a mandatory “environmental surcharge” on tickets to pay for climate-related changes it is being forced to make by governments in Europe.
The surcharge per flight ranges from around $1 to about $75, with hikes likely in the future to pay for ever tighter regulations on carbon dioxide.
European countries have been forcing companies to comply with their carbon trading schemes and requirements to use sustainable aviation fuel.
Air transportation will become more expensive for anyone traveling on these airlines, as governments continue to force businesses to reduce carbon dioxide emissions.
Although a similar plan has not yet been disclosed for the United States, the Biden Administration has been seeking to reduce carbon dioxide emissions to comply with Biden’s promise to the U.N. Intergovernmental Panel on Climate Change.
Lufthansa, Europe’s biggest airline group, is adding an Environmental Cost Surcharge to ticket prices for flights taken beginning next year to cover part of the steadily rising additional costs from regulatory environmental requirements that could be as high as 72 euros per flight (about $75). These costs include the statutory blending quota of initially two percent for Sustainable Aviation Fuel for departures from European Union (EU) countries starting January 1, 2025, adjustments to the EU Emissions Trading System and other regulatory environmental costs such as the Carbon Offsetting and Reduction Scheme for International Aviation. The airline group expects to spend billions of euros in the future for these additional costs and determined that it could not bear the successively increasing additional costs due to regulatory climate requirements in the coming years on its own.
The Environmental Cost Surcharge applies to all flights sold and operated by the Lufthansa Group departing from the 27 EU countries as well as the UK, Norway and Switzerland. The amount of the surcharge varies depending on the flight route and fare and is between 1 euro and 72 euros. The Environmental Cost Surcharge is levied on all tickets issued from June 26, 2024 and applies to departures from January 1, 2025. The surcharge is itemized on the Lufthansa Group Airlines booking pages, so consumers can see how much more their government is driving up ticket prices.
The Lufthansa Group has ambitious climate protection targets and plans to be carbon neutral by 2050. By 2030, the aviation group plans to halve its net carbon dioxide emissions compared to 2019 through reduction and compensation measures: accelerated fleet modernization, continuous optimization of flight operations, use of sustainable aviation fuel and offers for private travelers and corporate customers to make air and freight travel more sustainable.
EU’s Sustainable Aviation Fuel Quotas
As part of its “Fit for 55” climate protection program, the EU has set mandatory blending quotas that will increase over the years up to 2050. The sustainable aviation quota begins at 2 percent in 2025, increases to 6 percent in 2030, 20 percent in 2035 and 70 percent in 2050 and beyond. For the Lufthansa Group, this will lead to additional costs in the billions in the future.
EU Emissions Trading System
Emissions permit trading has been part of the EU Emissions Trading System to reduce the carbon dioxide emissions released from the aviation sector since 2012. The Lufthansa Group is subject to this system for all flights within the European Economic Area (EEA) and is also subject to the emissions trading systems of Switzerland and the United Kingdom for flights between the EEA, Switzerland and the UK. European countries have been forcing companies to comply with their carbon trading schemes by purchasing credits that have been used to offset emissions and have also been the target of fraudulent actors.
Carbon Offsetting and Reduction Scheme for International Aviation
Under the agreement on climate protection reached by the International Civil Aviation Organization (ICAO) in October 2016, the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), growth-related carbon dioxide emissions in international aviation must be offset by the purchase of climate permits since 2021. This is despite a record of climate and carbon credits being rife with fraud. All emissions from the aviation industry that exceed the carbon dioxide emissions of the baseline defined by the ICAO must be offset. For the years 2024 to 2035, this amounts to 85 percent of the emissions growth from 2019.
Conclusion
The surcharge on the air fares of flights of the Lufthansa Group is just the beginning of what will be future increases that Europeans can expect to pay so that EU climate goals can be attained. While the United States has not implemented such taxes yet, there will likely be regulatory action to come under a second Biden term that would result in similar charges as President Biden considers climate change to be the greatest threat to Americans and the world. Eventually, the result will be to make flying so expensive that only the rich can afford to board a plane. From this survey of elites, more than half believe that discretionary air travel should be banned. These surcharges are the first step to making that happen.
