Legal and regulatory factors
The Lufthansa Group is subject to numerous national and European regulations. These regulations have an impact on costs and – if they do not also extend to non-European competitors – the Company’s international competitiveness.
Future climate protection policy in Germany and Europe is particularly relevant in this respect. However, laws on data and consumer protection, air traffic taxes, aviation security fees, take-off and landing rights or night-flight bans likewise affect the Lufthansa Group and the aviation sector as a whole.
EU climate change mitigation regulations entail competitive disadvantages
In summer 2021, the European Commission presented its Fit for 55 legislative package, which contains regulatory proposals on how to achieve the European climate protection objectives of cutting carbon emissions by 55% compared with 1990. Out of a total of 13 legislative initiatives, three are particularly relevant for aviation: the reform of emissions trading (EU-ETS), the blending quota for sustainable aircraft fuel (ReFuelEU Aviation) and the proposal to introduce a kerosene tax (energy tax directive).
With regard to the EU-ETS, a decision was made to gradually reduce the total number of emissions certificates and to abolish the previous “free” allocations entirely from 2026. The costs of EU ETS certificates went up year-on-year by EUR 134m in 2024, primarily because the free allocations were discontinued. The regulations as a whole will make feeder traffic by European airlines more expensive and entail the risk of an increasing displacement of long-haul connections to hubs outside Europe, which will further distort competition between EU airlines and their competitors in the Middle East. To create an incentive to use sustainable fuels (SAF), which are significantly more expensive, a decision was made to provide a limited contingent of emissions certificates on a temporary basis to compensate for the additional costs of SAF. However, this does not sufficiently offset the additional expenses nor establish a level playing field with airlines from outside the EU.
The Lufthansa Group believes that the European blending quotas for sustainable aviation fuel (ReFuelEU Aviation) applicable since January 2025 will also result in significant competitive disadvantages in intercontinental traffic and lead to a steep increase in costs for European airlines, because airlines from outside Europe with transfer stops near Europe could then continue to use unblended fuel for part of the journey. The fact that SAF will not be available in sufficient quantities or at competitive prices for the foreseeable future remains has not been taken into account until now.
The Energy Tax Directive (ETD) is currently being revised at EU level. It makes sense to renew the tax exemption for kerosene throughout the EU, as the member states are currently considering. The introduction of a European minimum tax on kerosene would further exacerbate the problem of global competitiveness.
For the further legislative process, the Lufthansa Group therefore believes that improvements to climate protection regulations are urgently required in order to maintain the competitiveness of the airlines based in the EU and to avoid the transfer of traffic and emissions that is known as the carbon leakage effect. The increase in Germany’s air traffic tax which came into effect in May 2024 is further raising the aviation sector’s costs of doing business in the country, which are already high by European standards. This will thus also worsen Germany’s connections to European and global air traffic, with no benefit for the climate. Combined non-financial declaration.
More stringent consumer protection policies may have adverse impact
More stringent European and national consumer protection policies may lead to higher costs for the Lufthansa Group and its customers. These include, in particular, efforts to introduce insolvency protection for flights, automating refund and compensation payments, and banning advance payment for tickets and no-show clauses.
Potential of Single European Sky not achieved for now
In the spring of 2024, a compromise was reached on the revision of the legal framework for the Single European Sky. The goal of more efficient air traffic control in the EU has not been realised. By contrast, the rules merely reinforce the status quo. In the course of implementation the European Commission has already announced that it is working to leverage the remaining potential and thereby not only reduce carbon emissions and save fuel but also avoid flight delays. Whether these aims can be achieved in the short term remains uncertain.
Temporary rules for slot use have expired
The temporary changes to the EU Slot Regulation on the use of take-off and landing rights (slots) that were granted because of the coronavirus pandemic and Russia’s war of aggression against Ukraine have expired. The European Commission is now collectively evaluating whether the rules on slots, airport fees and the provision of ground services are still appropriate. This process is set to continue up to the end of 2025 and may result in revision proposals.