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Lufthansa’s Green Fare: A Hit or a Flop?

After a year of the sustainable fare being offered by Lufthansa, the time has come for a reflection.

A Lufthansa A320neo in Oslo (Photo: AirlineGeeks | William Derrickson)

Lufthansa has recently released a statement summarizing one year of the so-called Green fares being live.

The Green Option

Seeking to serve a particular niche of customers and trying to fulfill its sustainability obligations, Lufthansa introduced a new fare brand last year. The additional option was implemented in parallel to the existing brand in the carrier’s fare structure.

As sustainability is not usually the main focus of passengers looking for the best deal in the market, the Green fare brand is not targeting them either. It is set up already including some main ancillary services like checked baggage and prereserved seats. The increase in price over the Economy Classic (or even the Economy Flex) is meaningful but allegedly the extra revenue will go towards completely offsetting the carbon footprint of the particular trip.

The carrier pledges that Sustainable Aviation Fuel (SAF) will be then cycled into the fuel supply in the next six months after the travel was made. The remaining carbon offset is achieved by funding one of the sustainability projects, some of which include carbon capture technologies.

Lufthansa Economy Green fare attributes (Photo: Lufthansa’s website)

Lufthansa Claims The Demand Is There

According to the carrier’s press release, more than one million passengers have chosen the Green fare over the past year. That is less than one percent of the total of 123 million passengers carried by the Lufthansa Group last year but, given the limited number of markets, the release claims the popularity comes in at three percent.

The interesting turn of events that the release also mentions is that the routes with the highest Green popularity are the likes of Hamburg-Munich, Zurich-London, and Frankfurt-Berlin. This must be a welcomed result as domestic air travel in Europe is the reason for the most backlash among environmentalists. In total, travelers have offset more than 77,000 tonnes of CO2 since the launch of Green Fares by offsetting their flight-related carbon emissions.

Topping that, the airline mentioned that even four percent of its passenger base uses sustainable carbon-offsetting products within the carrier’s ecosystem. The Green fare is only part of the journey as passengers could already select other offsetting options during the booking process. It is also possible to offset flight-related CO2 emissions during or after the flight.

It’s Just Business

Those wondering where the hatch is will be disappointed. The sustainability measures come from three powerful sources. This is the customers, voting with their wallets, the citizens of the countries voting for the parties implementing the green policies, and the shareholders outlining the focus for the company.

As per the customers, it is not a coincidence that the Green fares were introduced starting with Scandinavia. Just before the pandemic took out all the headlines, it was a major concern in the region. This means providing such Green option might shift the revenue between the airlines.

The concerns of society make their way into the policy and through the policy to the economy with soaring carbon emission offset prices, which went up close to 20x in the last decade. The item became a major one on the cost side of the business.

As per the shareholder’s interest, Lufthansa Group is a publicly traded company. A simple check of the top shareholders of the company and their investing strategy, will reveal that ESG (standing for Environmental, Social, and Governance issues) is a major factor. The sustainability mandate feels toned down in light of the recent geopolitical events but is a noble one nonetheless.

Filip Kopeć
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Author

  • Filip Kopeć

    A passionate aviation enthusiast that started off his career as an aerospace engineer, but found his true calling on the commercial side of the airline business. Now as a finance guy among avgeeks and an avgeek among finance guys, he has experience working in the Revenue Divisions of three airlines. In his spare time he enjoys traveling, but admittedly sometimes is more about the journey than the destination.

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