Europe’s $36 billion of airline bailouts could herald a shift to lower-emission travel as countries impose environmental strings on aid. Those requirements may also mean customers have less choice and pay more. Austria is taking the most radical steps in agreeing to fund the local arm of Deutsche Lufthansa AG. The government will impose a minimum 40-euro ($45) ticket price to discourage non-vital journeys while hiking fees on flights under 350 kilometers (217 miles) to 30 euros. And Austrian Airlines services to locations less than three hours from Vienna will be replaced by train journeys.
“It’s good to end things that just don’t make sense, such as tickets that are too cheap,” Lufthansa Chief Executive Officer Carsten Spohr said Monday after the Austrian unit sealed 450 million euros in state support. “It doesn’t make sense ecologically or economically. In that respect I can imagine implementing these measures in other European locations.”
For low-cost airlines, which are more profitable than network carriers and have received far less state support, elements of the new green agenda threaten to add insult to injury. Ryanair Holdings Plc, Europe’s biggest discounter, and Wizz Air Holdings Plc, the No. 1 in Eastern Europe, have already hit out at the bailouts for their potential to distort competition for years to come.
Tamara Vallois, a spokeswoman for Wizz, said Tuesday in an email that Austria hasn’t yet made it aware of any stipulation on minimum fares but it “rejects any decision” that undermines the freedom of pricing and the European Union’s principles regarding the free movement of services, people, goods and capital.