PLANE POLITICS

Berlin Mulls Help for Aviation Industry

lh-airberline-dpa
The German government wants to give its airline industry a boost.
  • Why it matters

    Why it matters

    German airline executives, including the head of Lufthansa, have argued that the government hasn’t done enough to help domestic airlines, which are struggling to compete with state-supported carriers from Turkey and the Gulf states.

  • Facts

    Facts

    • The government is in talks with the airline industry over possible ways to help the struggling sector.
    • The country’s two main carriers, Lufthansa and Air Berlin, have both reduced capacity, citing stiff competition.
    • Among the most controversial options being discussed is the option of is doing away with the airfare surcharge implemented in 2011, which brings in €1 billion in taxes.
  • Audio

    Audio

  • Pdf

Germany’s governing coalition is working on a range of proposals that would provide relief to the country’s airlines, Handelsblatt has learned.

Members of Angela Merkel’s conservatives – including her parliamentary group leader, Volker Kauder, and Transport Minister Alexander Dobrindt – are meeting Wednesday to discuss how to move forward with the negotiations to iron out a concept by this summer.

The head of Germany’s largest airline, Lufthansa, is due to join the discussions.

“In the Gulf states or Turkey, the aviation industry is specifically promoted and supported as a strategic branch,” Carsten Spohr said. “Here, the aviation industry is unfortunately too often seen as a burden.”

According to sources within the government, officials will consider a number of options. Among them: whether to lengthen operating times at Germany’s largest airports in Frankfurt and Munich, or in Leipzig and Cologne-Bonn. Berlin could also cut the security fees that airlines have to pay, or subsidize the development of quieter, more efficient planes.

The talks come after the government issued a report on the state of the country’s airports and the carriers that serve them. The 100-plus-page report, compiled my research institute DIW Econ, Uniconsult and others, reviews a number of ways that German politicians could help the industry.

The government’s decision to devote €600 million to help German carmakers sell electric models has buoyed hopes within the aviation industry that Berlin might be ready to provide more relief to them.

“For the first time since liberalization, the German government with its assessment has its own analysis of the economic and competitive situation of international aviation,” said Matthias von Randow, executive director of the German Aviation Association, or BDL.

Particularly in light of the plans spelled out in 2013’s coalition agreement to make Germany’s airline industry more competitive, Mr. Randow argued that it’s time to take action. “There are now a number of proposals on the table that the government can decide on separately,” he said.

Airport operators and carriers in the country have long been calling for measures, ranging from tax breaks to fee cuts, to help it compete with their global rivals. Meanwhile, the government’s decision to devote €600 million, or $681.9 million, to helping German carmakers sell electric models have buoyed hopes within the aviation industry that Berlin might be ready to provide more relief to them.

Finance Minister Wolfgang Schäuble is the person who could jettison those dreams, however. He is weighing a fuel tax on training and maintenance flights, and letters from parliamentary leaders appear to have made little difference.

“Unfortunately, there is more headwind from German and European politicians,” said Michael Fuchs, deputy leader of the center-right Christian Democrats’ parliamentary group.

Politicians are also pushing for more cooperation with Germany’s state governments, which play a pivotal role in any plans to upgrade airports, change fees or revise night-flying bans.

“Making Germany’s network of airports sustainable urgently requires better coordination, networking and planning across the state level,” said the Green Party’s transport spokesman, Stephan Kühn.

According to government officials in one German state, talks are underway at a “working level,” but there’s much negotiating left to do. On the national level, officials from the transport, finance and environment ministries are reviewing which proposals might have a chance of being implemented before federal elections in 2017.

Among the most controversial options is doing away with the airfare surcharge implemented in 2011, which brings in €1 billion in taxes.

Ms. Merkel’s junior coalition partners, the center-left Social Democrats, have a slightly different idea – and one that might be more palatable to Mr. Schäuble. SPD deputy parliamentary leader Sören Bartol suggested investing the money generated by the surcharge in developing quieter and more environmentally friendly planes.

Mr. Bartol said the aviation industry would be smart to join forces on the proposal “in order to convince the finance minister.”

 

Daniel Delhaes reports on politics, transport and airlines from Handelsblatt’s Berlin bureau. Jens Koenen leads Handelsblatt’s coverage of the aviation and IT industry and is bureau chief of the Frankfurt office.To contact the authors: delhaes@handelsblatt.comkoenen@handelsblatt.com.

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!