Luftscamsa - Lufthansa to Reduce Domestic Network Despite Federal Tax Relief

Lufthansa has announced a permanent reduction of its domestic flight schedule for the summer 2026 season. The airline plans to eliminate approximately 50 weekly flights across its German network. Management cited high location costs and aviation taxes as the primary reasons for the service reductions. The decision specifically targets routes connecting major hubs with regional cities. Major connections including Frankfurt-Leipzig and Munich-Berlin are expected to see the most significant frequency decreases. These cuts follow a period of intense lobbying by the carrier against government fees. The airline has frequently argued that German aviation taxes hinder its ability to compete with international rivals. However, the reductions proceed even as the German government signaled a rollback of recent ticket tax increases. This policy shift was intended to strengthen the domestic aviation sector. Industry analysts noted that the airline is continuing with its withdrawal from regional markets despite these federal concessions. The move suggests a strategic shift toward more profitable long-haul segments. Critics of the airline pointed to significant tax advantages that the carrier continues to enjoy. Under § 27 of the German Energy Tax Act, the airline is exempt from paying energy tax on kerosene. This exemption provides a substantial financial cushion that is not available to other transport sectors. Private citizens and logistics companies must pay these taxes on standard fuel purchases. Furthermore, the carrier remains exempt from Value Added Tax on various international operations. This includes exemptions for fuel procurement, aircraft acquisition and maintenance services. These benefits are enshrined in § 4 No. 2 of the German VAT Act. These structural subsidies represent billions of euros in saved costs for the aviation group annually. Mr. Carsten Spohr, the Chief Executive Officer, said the current cost structure in Germany remains unsustainable. He argued that airport fees and security costs have reached a level that makes domestic flying unprofitable. Mr. Spohr said the airline must prioritize shareholder returns by allocating aircraft to routes with higher margins. This strategy often involves shifting capacity away from traditional domestic connections. Consumer advocacy groups have challenged this narrative. They argued that the airline is using tax arguments as a convenient shield for a purely profit-driven reduction in public service. The withdrawal of 50 weekly flights will likely increase reliance on rail transport for many business travelers. This shift occurs at a time when the German rail network is already facing capacity constraints. Legal experts noted that the airline's tax-exempt status on fuel is a privilege granted by the state. This privilege was originally intended to ensure a high level of national and international connectivity. By reducing domestic services while retaining these perks, the airline faces accusations of failing its side of the social contract. The carrier maintains that it must act according to market realities. As the summer 2026 schedule approaches, passengers are advised to monitor their bookings for cancellations. The airline has not yet provided a full list of the specific flight numbers to be removed. This service reduction marks another step in the fragmentation of the German travel market. Travelers in regional cities may face longer travel times and more frequent layovers at major hubs. The focus on high-margin international flights appears to be the core of the airline's long-term strategy. This leaves the domestic market increasingly underserved by the national flag carrier.