Heathrow facing ‘significant challenges’ despite increasing passenger forecasts

The boss of Heathrow today warned of “significant challenges” ahead despite rising forecasts for passenger numbers this year.

The London hub cautioned that the ongoing war in Ukraine, higher fuel costs, continuing travel restrictions for key markets like the US and the potential for a further variant of concern “creates uncertainty going forward”.

The airport issued a “realistic assessment” that travel demand will reach 65% of pre-pandemic levels overall for the year following last week’s warning from the Bank of England that inflation is set to pass 10% and that the UK economy will likely slide into recession.

This came despite Heathrow increasing its 2022 forecast from 45.5 million passengers to nearly 53 million – a 16% increase on previous assumptions.

Terminal 4 will reopen by July and the airport is recruiting up to 1,000 new security officers “to maintain the service our passengers expect over the summer”.

April saw five million passengers use the airport, with outbound leisure travellers and people cashing in airline travel vouchers driving a recovery in passenger demand which is expected to last throughout the summer.

Heathrow said it delivered a “strong service” throughout the Easter holiday period, with 97% of passengers through security within ten minutes compared to queues of over three hours at other airports.

The airport’s largest carrier British Airways announced last week that it is expecting a return to only 74% of pre-pandemic travel this year – just 9% more than Heathrow’s forecasts “which have proven to be amongst the most accurate in the industry during the pandemic”.

Heathrow revealed that expects to remain loss-making throughout this year and does not forecast paying any dividends to shareholders in 2022.

Some airlines have predicted a return to profitability this quarter and expect to resume paying dividends as a result of the ability to charge increased fares

The Civil Aviation Authority is in the final stages of setting Heathrow’s airport charge for the next five years.

The airport said: “It should be aiming to set a charge that can deliver the investments passengers want with affordable private financing while withstanding the shocks which are undoubtedly to come.

“Our proposals will deliver the easy, quick and reliable journeys passengers want for less than a 2% increase in ticket prices.

“We have proposed an option for the CAA to lower fees by a further £8 and to repay airlines a cash rebate if more people travel than expected.

“We urge the CAA to carefully consider this common sense approach and avoid chasing the low-quality plan being pushed by some airlines which will only result in the return of longer queues and more frequent delays for passengers.”

Heathrow chief executive John Holland-Kaye said: “We all want to see travel get back to pre-pandemic levels as quickly as possible, and while I am encouraged by the rise in passenger numbers, we also have to be realistic.

“There are significant challenges ahead – the CAA can either plan for them with a robust and adaptable regulatory settlement that delivers for passengers and withstands any shocks, or it can prioritise airline profits by cutting back on passenger service leaving the industry to scramble when things go wrong in future.”

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