Introduction to Aviation Tax Cuts
For Gerald Wissel, founder and CEO of Hamburg-based aviation consulting firm Airborne Consulting, a recently announced ticket tax cut for airlines operating in Germany "will not reach passengers" because it is "purely symbolic in nature." The state is giving up revenue, but passengers won’t see any of the tax cuts, Wissel predicted. Although airlines would save about 15 euros ($17.5) per ticket – potentially up to 50 euros in certain fare classes – dynamic pricing systems mean those savings are unlikely to show up on customers’ bills.
The Government’s Reduction of Aviation Tax
In November, the federal government announced plans to reduce aviation tax to the pre-May 2024 level from July 1, 2026. Depending on the length of the route, the discount is between just under 3 and just under 13 euros per ticket. The aviation industry, which has long warned that Germany is losing its competitiveness, welcomed the move. Joachim Lang, CEO of the Federal Association of the German Aviation Industry, called it “an important signal” that ends “the years-long upward spiral in taxes and duties.”
The Impact of High Costs on German Airports
High costs render German airports uncompetitive. State-imposed location costs would fall by about 10%, but further relief would be needed if Germany wanted to benefit from Europe’s post-pandemic air travel boom. The recovery in traffic is gaining momentum, with passenger traffic across Europe increasing by 7.4% in 2024, thus exceeding the level last recorded before the COVID-19 pandemic for the first time.
The Challenge of Aging Fleets and Increasing Demand
Aging fleets and increasing demand are major challenges facing the aviation industry. The average age of the world’s commercial aircraft fleet has risen to 15 years – the highest in aviation history – while the industry is also grappling with a long-term pilot shortage. A report by aviation industry group IATA warns of a “record high” order backlog for new aircraft of 17,000 aircraft worldwide. At current delivery rates, it would take 14 years to achieve this, which is twice the six-year average backlog for the period 2013-2019.
Cuts in Airlines and Their Impact on German Airports
Cuts in airlines are hitting German airports hard. Ryanair will cancel 76 of its 246 weekly flights in Berlin and 44 routes from Cologne. EasyJet plans to increase seating capacity by just 2-4% in 2026 – well below its group-wide target of around 7%. Germany remains Europe’s largest aviation market – too big for major airlines to ignore. Wissel predicted that “Ryanair will come back when the backlog of aircraft is cleared.”
