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Air Berlin will cut capacity by 5 percent beginning
in summer 2011, targeting routes where it feels unable to pass on the new German air travel tax in full to passengers because of intense competition, the
carrier said on Thursday.
"Although the economic
conditions remain favorable, we are cautious with respect to the coming year,"
Air Berlin CEO Joachim Hunold said as the airline revealed its quarterly
profits. "In my opinion, the fierce competition on some flight routes will
make it impossible to pass on the air travel tax to the passengers in its
entirety. Therefore, we will reduce our capacity by 5 percent and reduce our
fleet by seven aircraft, instead of carrying out the originally planned
increase." He did not specify which routes would be cut.
German airlines have complained loudly since
the federal government introduced the tax on Sept. 1, valid for flights from
Jan. 1, 2011. The tax is €8 for flights within Europe, €25 to medium-haul destinations
and €45 to long-haul destinations. Air Berlin said on Thursday its annual liability
for the tax is likely to be €160 million to €170 million.
The airline operates a hybrid business model
but signaled its growing aspirations as a business carrier when it signed a
deal on July 27 to join the Oneworld alliance.
The airline had a successful three months ending
Sept. 30, recording an operating profit of €171.7 million.