Heathrow predicts surge of summer holidaymakers will help aviation recovery

Heathrow has predicted that a “surge” of holidaymakers will help a recovery in aviation this summer, despite passenger numbers at the airport last year tumbling to the lowest levels since the 1970s.

The UK’s busiest airport also indicated it still hoped to build a third runway in the coming years as the industry emerges from its worst crisis in its history.

The airport said on Wednesday it lost £ 1.8bn in 2021, bringing total losses during the coronavirus crisis to £ 3.8bn.

John Holland-Kaye, chief executive, said 2021 was “the worst year in Heathrow’s history” after passenger numbers fell to 19.4m, even lower than the 22.1m who traveled in 2020, the first year of the pandemic.

“Demand is now starting to recover,” as the impact of the Omicron variant had faded, he said. The airport was also working with airlines “to scale up our operations” in time for the summer peak season.

Terminal 4, which was mothballed during the tight UK government travel restrictions, would be open in time for the summer, he added.

The airport expected to hit its forecast of 45.5m passengers this year thanks to “a surge of Brits heading for summer sun”, even though passenger numbers slipped 23 per cent below expectations in the first two months of the year because of Omicron-related travel restrictions.

The upbeat forecast meant Heathrow expansion was “back on the table”, Holland-Kaye told the Financial Times.

“We are going to take some time this year to decide what the timetable is going to be. . . but this is the right time to be investing in future capacity, we should not wait to be full again, ”he said.

Heathrow is entitled to apply for planning permission for a third runway after the Supreme Court in 2020 ruled the project could proceed.

Heathrow also pledged to press ahead with plans to raise its landing charges to help recover losses built up during the pandemic, despite fierce opposition from airlines that use the hub.

But Holland-Kaye said he was “anxious” the UK’s Civil Aviation Authority would “undercook” a decision on whether to raise landing fees at the airport, an issue that has caused a deep rift with the airlines.

“This is an existential issue for us,” he said.

The regulator has blocked Heathrow’s efforts to almost double its fees, but later this year will deliver a final judgment on how much the airport will be allowed to charge.

Airports typically make up their income from a mix of landing fees for the use of their runways by airlines, and revenues from their own facilities, including retail space, catering and car parking.

The collapse in passenger numbers during the pandemic has blown a hole in both these business lines.

Airlines have been aggressively lobbying against any big rise, and one senior executive has predicted the issue will end up in court if Heathrow is cleared for an inflation-busting price rise.

Javier Echave, Heathrow’s chief financial officer, said the airport’s finances were “totally” dependent on a good outcome from the CAA, and warned that investment in the airport was at risk without one.

Heathrow’s net debt level, which has been criticized by airlines, rose 2.1 per cent to £ 15.4bn in 2021.

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