Will Germany's aviation tax cut lower ticket prices?

German lawmakers in the Bundestag on Thursday voted in favor of a proposal to cut aviation tax, raising hopes the move could make flying slightly cheaper in the country. If it’s approved by the upper house of parliament, the Bundesrat, the tax will be lowered from July 1 to the level it was at before the last increase in May 2024. Depending on the length of the flight, the tax will drop between €2.50 and €11.40 ($2.90 to $13.25) per flight.

The measure is expected to reduce federal tax revenues by approximately €350 million per year. “We are, of course, grateful for this signal to reverse the latest tax increase, but that does not yet mark a turnaround,” Kay Lindemann, the Lufthansa Group's representative for policy and regulation, told DW. The aviation tax accounts for only a portion of the total tax burden, which has doubled in Germany since 2019, he pointed out. “If we impose too heavy a tax burden in Germany, we will lose aircraft to other locations because the business conditions there are more attractive, and that will result in a loss of economic value.” But some experts warn that the tax cut will not have a meaningful impact on ticket prices. "The state is giving up revenue, but passengers will not see any of the tax reduction," said Gerald Wissel, founder and CEO of Hamburg, Germany-based aviation consulting firm Airborne Consulting. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video According to the plan, the aviation tax for domestic and European flights, as well as other short-haul flights, will be reduced from €15.53 to €13.03. For medium-haul flights (destinations between 2,500 and 6,000 kilometers away), the tax will be cut from €39.34 to €33.01, while for long-haul flights, it will be down to €59.43, instead of €70.83. However, energy costs have risen sharply since the outbreak of the Iran war at the end of February. “The recent surge in kerosene prices has forced us to suspend about 1% of our least profitable routes," Lindemann said. "The current reduction in the aviation tax is not sufficient to offset the competitive disadvantages resulting from government-imposed costs compared to other European countries," the Federal Association of the German Aviation Industry (BDL) said in a statement. These burdens are reflected in the industry's modest growth rates. Data compiled by the German Federal Statistics Office (Destatis) show 84 million passengers subject to aviation tax traveled in Germany last year — a steep climb from 62 million in 2022, but still below the 96 million recorded in 2019.

Key points

• The measure is expected to reduce federal tax revenues by approximately €350 million per year.
• “We are, of course, grateful for this signal to reverse the latest tax increase, but that does not yet mark a turnaround,” Kay Lindemann, the Lufthansa Group's representative for policy and regulat…
• The aviation tax accounts for only a portion of the total tax burden, which has doubled in Germany since 2019, he pointed out.
• “If we impose too heavy a tax burden in Germany, we will lose aircraft to other locations because the business conditions there are more attractive, and that will result in a loss of economic value…
• "The state is giving up revenue, but passengers will not see any of the tax reduction," said Gerald Wissel, founder and CEO of Hamburg, Germany-based aviation consulting firm Airborne Consulting.