Germany’s government is moving closer towards doubling taxes on short-haul domestic flights.
While the government says the move is designed to fight greenhouse gas emissions, it would also benefit German flag-carrier and European behemoth Lufthansa which has a virtual monopoly on flights within the country.
According to Bloomberg, the proposal is backed by Chancellor Angela Merkel’s ruling Christian Democrats along with their coalition partners, the Social Democrats.
It follows a proposal from a leading Christian Social Union (the Bavarian-affiliate of the ruling Christian Democrats) politician to implement a price floor on flights to promote train travel on short routes.
Societies around the world are grappling with the ecological costs of flying. But this proposal also comes as Lufthansa is fighting off low-cost carriers who have gained a foothold in Germany following the collapse of Air Berlin.
According to BoardingArea’s Matthew Klint at Live and Lets Fly “the new tax might not only help Lufthansa on a short-term basis, but force another Ryanair retreat in Germany, which would further raise airfares and entrench Lufthansa as the monopoly carrier.”
He notes that the proposed regulation contains a loophole exempting connecting flights. That seems designed to benefit Lufthansa — a network carrier — over low-cost carriers like Ryanair, who only sell point-to-point flights.
Investor-focused publication Seeking Alpha agrees, noting that the tax would “reduce Lufthansa’s disadvantage in the budget segment without affecting its premium long haul business. It would thereby help the company to fortify its home market.”
It’s still unclear whether the new regulation will pass. What do you think? Is the regulation designed to stop ecological damage from flying or benefit Germany’s home carrier?
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