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Business & Money
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Ticket prices set to soar as airlines chase profits

Published: 14 Aug 12 08:53 CET | Print version
Online: http://www.thelocal.de/money/20120814-44341.html

The days of really cheap air travel are numbered, Germany’s air travel industry association has warned, saying that airlines needed to increase their profits to remain solvent.

“Flying is going to become more expensive,” said Klaus-Peter Siegloch, president of the German Air Transport Industry (BDL). The time of “very cheap tickets is nearing an end,” he told Monday’s Hamburger Abendblatt newspaper.

“The average profit must increase if we want to have solvent airlines in the future,” he said.

Lufthansa and Air Berlin, the two biggest German airlines are both having difficulty, and are struggling to reduce their costs. Lufthansa made a loss of €168 million in the first half of this year, while Air Berlin was €66 million in the red in the second quarter of the year.

Lufthansa ticket prices are already starting to take off, as evidenced in a letter to investors saying that the price situation was “continuing to develop positively” in July. A spokesman suggested that prices had been rising for years. “Flying is becoming more expensive,” he said.

Siegloch complained that German airlines and airports were being burdened with increasing costs which were particular to them and not seen elsewhere. Airline passengers have to pay a ticket tax since the start of last year – currently that adds €7.50 to each trip.

He called for this tax to be scrapped. The state “should not artificially make the situation more difficult for domestic companies,” he said.

High fuel costs were also making it difficult to keep prices low, he said.

The situation at Germany’s airports was also tricky, with just six of the 22 making a profit, he said. Those near the borders were suffering in particular as passengers were opting to travel from foreign airports to avoid the ticket tax, he suggested.

DAPD/The Local/hc

What do you think? Leave your comment below.


Your comments about this article:

#1
09:28 August 14, 2012 by Berlin fuer alles
The ticket tax is a self defeating tax making Germany more expensive to visit. But what makes Klaus-Peter Siegloch think AirBerlin and Lufthansa are offering cheap tickets? They are amongst the most expensive already. If they are not making profit with those ticket prices then they should consider becoeing more competitive and filling their planes. If they already have full planes and are losing money then the management should be sacked as there is money being wasted.
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#2
09:36 August 14, 2012 by pigsnuck
I fly internationally regularly, and sometimes I fly Lufthansa. Lufthansa planes seem to be stuck in the early 90's! And the cabin crew are generally taciturn and not very helpful, even in business class. I try to fly other airlines whenever possible, and I'm sure I'm not the only one.
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#3
10:12 August 14, 2012 by lucksi
People are traveling to foreign airports to save 7.5 Euro in taxes? Yeah, right.

I live near some of those border airports, like Düsseldorf, Weeze ect. It's at least half an hour more to drive to the nearest airport over the border and my car goes through more costs in fuel than the 7 bucks I could save.

It has probably nothing to do with the fact that the flights are much cheaper there, but hey, let's blame it on some tax.
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#4
10:49 August 14, 2012 by ChrisRea
¦quot;The average profit must increase if we want to have solvent airlines in the future¦quot;

I am not sure if Mr. Klaus-Peter Siegloch masters the financial concepts. Solvency has little to do with profit, but with cash-flow. If you have a profit, as little as it can be, but a good cash-flow, then you are never in peril of insolvency. I guess that what he meant is that the airlines should be(come) profitable, not that the average profit must be increased.
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#5
12:05 August 14, 2012 by Berlin fuer alles
@lucksi People base their holiday destination choice on costs. 7,50 EUR each way is 15 EUR per person. A family of 4 will find this to be a consideration. Not everyone flies for business reasons only. And even in business all costs are taken into consideration anyway so a company flying thousands per year for business reasons will consider this in their cost analysis even if it is only a small concern. Taxes do impact on where and how people spend their money. Always has and always will.
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#6
20:11 August 14, 2012 by maxsleg
Lufthansa must be one of the most operationally clumsy organisations I've ever had the (mis)pleasure to be involved with. Arrogant management, staff with no interest in customers and a very broken customer interaction model. After spending 4 years flying +150k a year with then I've changes. Emirates, Turkish etc are all eating their lunch. Even United have figured this out. Operational inefficieny is killing them, not ticket pricing........
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