Lufthansa warns of possible fare increases

Beginning this year, all airlines are required to hold emission rights in the form of CO2 certificates for flights to and from Europe. In 2012, 82% of the necessary certificates will be awarded to airlines free of charge, however airlines will have to purchase another 15% of the certificates, with 3% being reserved for new airlines. As these allocations are based on average emissions for the years 2004 to 2006, the Lufthansa Group will have to buy at least 35% of the certificates it needs to represent its growth in recent years. Judging by the average trend in certificate prices, Lufthansa expects to incur additional expenses of EUR 130m in 2012. As competition is tough, especially from non-EU companies whose operations are only subject to limited emissions trading rules, Lufthansa will redirect the costs via higher ticket prices, as recommended by the EU. Lufthansa will therefore include the cost of purchasing the certificates in its existing fuel surcharge as of the beginning of 2012. However, it has no immediate plans to increase this surcharge. Carsten Spohr, member of the executive board of Deutsche Lufthansa AG, commented, “Climate change is a global challenge. This means we also need a global solution. The incorporation of airlines in the EU Emissions Trading Scheme means that European operators are now facing additional costs which will make flying within and via Europe more expensive for passengers. It will also distort competition and impact on the sustainability of the aviation industry if it proves impossible to implement with the competitive neutrality promised by policy makers. However, given the huge resistance at an international level, it is unclear how the situation will develop.”Lufthansa last raised its fuel surcharge for European and long-haul flights on Dec. 15 by three to 10 Euros. In the future, the surcharge will reflect both the price of oil and the cost of acquiring emission rights. (