However, in Germany the most important explanation for the lower passenger numbers post-Covid is the sluggish development of the domestic market. The latest forecast from the German Aviation Association (BDL) shows that for June to November 2025 international services have almost completely recovered. Domestic traffic, however, is at just 53% of pre-pandemic levels.
This can be attributed to the de-facto monopoly Lufthansa has over this market. Air Berlin was forced out after prolonged losses, in part due to Lufthansa’s competitive strategies. Ryanair entered the German domestic market in 2016 but quit within a year after heavy losses. EasyJet briefly operated part of Air Berlin’s network, but also lost money and withdrew from the domestic market after Covid. Today, Lufthansa and Eurowings control 96% of the domestic market. This means that Lufthansa optimises capacity to maximise yields, focusing on flights between its hubs. As a result, many smaller cities lost hub connections, since Lufthansa’s strategy is focused on monopoly profitability, not maximum passenger access. Therefore, in line with Cournot competition theory, Lufthansa deliberately keeps capacity low so that only demand willing to pay above full operating cost is served (which of course does not include low-cost passengers).
Therefore, the passenger number trend German airlines attribute to national taxes, fees and levies is rather to a large extent the result of Lufthansa deliberately keeping capacity low to maximise its profits.
To summarise, the German case study highlights in practice that claims that national taxes, fees and levies alone reduce passenger numbers lacks empirical evidence – instead trends in passenger numbers can more often be associated with airline pricing and business strategies. It fails to reflect the actual business decisions and strategies that shape the aviation industry.
