Germany to Cut Aviation Tax by Mid-2026; Lufthansa Shares Climb on Relief

The German government will cut the Germany aviation tax by July 2026, reversing last year’s increase and easing pressure on carriers that say the country has become Europe’s costliest place to fly. Officials expect the reduction to lower the tax burden on airlines by about €350 million a year, and investors cheered the move: shares in Lufthansa rose roughly 2.5% after the plan became public, signaling hopes that air travel costs will start to come down.

Background: the 2024 increase and its impact

In 2024 the aviation levy rose sharply:
– Short-haul ticket tax: from €12.48 to €15.53
– Medium-haul: from €31.61 to €39.34
– Long-haul: from €56.91 to €70.83 per ticket

The government collected around €1.9 billion from the aviation tax in 2024, a haul that coincided with broader cost spikes across the sector and fed warnings from airlines about shrinking networks.

Cost pressures on carriers and airports

Carriers and airports say Germany now sits at a clear disadvantage due to multiple rising charges:
– Take-off and landing charges: up about 40% since early 2025
– Air traffic control fees: up about 25% over the same period

These increases, layered on top of the higher aviation tax, pushed air travel costs higher for consumers and businesses and made it harder for German airlines to compete with rivals based elsewhere in Europe.

Airline reactions and network effects

• Lufthansa has already trimmed routes and shifted capacity in response. The airline has warned that without relief it may continue cutting connections and moving aircraft to more profitable markets, potentially reducing traffic through hubs like Frankfurt and Munich.
• Ryanair has reduced some routes in recent seasons, explicitly citing the higher levy and airport charges.

Airport managers warn that losing links to major European cities can cost local communities investment and tourism. Predictable costs help airports plan upgrades and staffing; sudden hikes can choke growth.

Government measures and stated goals

The coalition led by Chancellor Friedrich Merz frames the tax cut as part of a wider effort to:
– Make the aviation sector more competitive
– Keep travel affordable for families and small firms
– Streamline airport processes and speed up security checks

The package — including the tax roll-back and operational improvements — is again expected to deliver around €350 million in relief to the industry. Officials argue that healthier airlines support jobs and regional ties, especially for areas that rely on air links for trade and tourism.

“Strong airlines, efficient airports, and a competitive market are needed to keep fares sensible and to protect connectivity across the country.”
— Christoph Ploß, Federal Government’s Co‑ordinator for Tourism (CDU)

Ploß has pushed for the reversal, warning that higher taxes mean fewer flight options and pricier holidays. While the plan targets carrier costs, the political case emphasizes consumer impact and public concern over rising prices.

Timing and what travelers should expect

• The change is scheduled by mid-2026 and will be included in the 2026 federal budget.
• The immediate effect won’t show up on tickets tomorrow, but airlines often adjust schedules and capacity in advance.
• The relief could slow or halt further route reductions and help steady demand when many families face tight budgets.

Policy context and wider debate

The decision aligns with the coalition agreement between the CDU and Social Democratic Party, which committed to reduce “air-specific taxes, charges and fees” and roll back the latest aviation tax increase.

This move reflects a broader European debate about balancing:
– Climate goals and emissions policy, versus
– The need to keep essential transport systems functioning and maintain connectivity

Germany is not scrapping its levy; it is scaling back a recent increase that industry groups said tipped the system out of balance.

Economic signalling and market reaction

• Lufthansa’s roughly 2.5% stock rise highlights how sensitive airlines are to policy shifts affecting fuel, fees, or taxes.
• Officials hope the tax cut and operational reforms will stop capacity shifting to neighboring countries and preserve German hubs’ roles in long‑haul and intra‑European travel.

Design of levies matters

Industry groups emphasize that tax design can matter as much as the rate:
– A levy applied per ticket hits price‑sensitive customers hard.
– High airport charges can push airlines to reassign aircraft overnight, reducing connectivity.

The government’s package aims to address both ends: lower tax pressure and smoother airport operations. If successful, the payoff could be a steadier network and fewer last‑minute cancellations of marginal routes.

Budget and next steps

• The cut will be written into the 2026 federal budget, giving the sector a clear date to plan around.
• Airlines will watch how the relief aligns with airport and air traffic control fees, which have risen about 40% and 25% respectively since early 2025.
• Officials have not released new revenue targets tied to the change, but the €1.9 billion 2024 take shows the levy’s fiscal weight. Any reduction will feature in upcoming budget debates.

Critics may press for the relief to be tied to environmental measures or service commitments; supporters argue more flights, stable jobs, and competitive fares will sustain broader tax receipts by keeping the economy connected.

Official information on federal tax policy is published by the German Federal Ministry of Finance. For fliers, the bottom line is simple: if policy reduces costs as promised, fares should face less upward pressure, and Germany’s main airports may retain more of the routes that keep the country moving.