In the first half of 2023, the Federal Statistical Office of Germany recorded an increase in prices for international flights of almost 25%. Moreover, European flights cost 32% more than a year earlier. The expensive summer vacation period is nearly over, but there are no signs of letting up in the fall vacation travel market. Similar increases are observed in France and other European countries.
Yet the summer will have been excellent for the airlines
Lufthansa subsidiary Eurowings announces 30% more bookings than at the same time last year. Autumn seems to be filling up despite prices remaining too high.
Taxes weigh on prices
A majority of German airports have reached the upper limit of 10 euros set by the state for the screening of passengers and hand luggage only. Added to this are air traffic taxes for each individual passenger (12.73 euros for a European flight) as well as airport and air traffic control fees.
“Taxes and fees have increased so much in Germany that they are on the way to replacing the costs of kerosene of the year as the most expensive part of operational costs for an airline”, laments the boss of Eurowings on the platform LinkedIn.
Germany’s pricing structure for air traffic is “completely dysfunctional and uncompetitive”, said Ryanair chief Eddie Wilson. The Irish warn against further price increases, which would further close the German market and demand maximum prices from German customers. However, even in countries like Italy, led by market leader Ryanair, ticket prices have skyrocketed this year.
Explanations for these price increases
Expert Gerald Wissel from the consulting firm Airborne sees objective reasons for the price increase. With inflation, the costs have increased enormously. “It starts with the staff, goes through the scarcity of spare parts and maintenance services and does not stop at the increase in the purchase prices of on-board catering.”
In addition, airports and air traffic control have increased their charges. “Air traffic control faces a particular legal problem: it must in principle work to cover the costs. We are now trying to recover the losses of the covid period by significant tax increases.
The director of Deutsche Flugsicherung (DFS), the German air traffic control, Arndt Schoenemann, sees problems for air traffic due to the high charge of charges. This is why the DSF boss has proposed that airlines be relieved of currently excessive charges for airline services.
Supply and demand remains unfavorable to travelers
The most important reason for these high prices remains the unfavorable supply/demand ratio for consumers. The German aviation market is recovering much slower from the covid shock than in many other EU countries: in the first half of the year supply was just under 75% of the volume of the year before the crisis of 2019.
The low-costs have deserted Germany
Budget airlines such as Ryanair, Easyjet or Wizz Air have avoided Germany due to high entry costs. In the first half of the year, their supply at German airports was only 63% of the 2019 level. With limited capacity, companies first looked for where they could most easily make money. This is easier in many other European markets than in Germany, where Lufthansa is heavily dominant. “But the strategy will change when Boeing delivers and Ryanair can put new planes into service as planned.”