Heathrow airport has warned it expects a drop-off in passenger numbers after a summer surge, with airlines already cancelling services into the autumn amid higher fuel costs, war in Ukraine and a potential further Covid wave.
However, one of its main UK airline customers, Virgin Atlantic, accused Heathrow of “seeding doubt” in the recovery to convince the regulator it should be allowed to raise landing charges.
The airport’s total pandemic losses have topped £4bn, but passenger numbers have started to recover after the UK government lifted travel restrictions. Heathrow said 9.7 million passengers passed through the airport in the first three months of the year, with passenger numbers at their highest since the start of the pandemic, following the sudden lifting of all UK travel restrictions on 18 March.
The airport made a £223m adjusted loss before tax in the first three months of the year, compared with £329m the same time last year. The group expects to remain loss-making this year, and to not pay any dividends to shareholders.
However, Heathrow raised its 2022 passenger forecast from 45.5 million to 52.8 million, which means a return to 65% of pre-pandemic traffic.
The Heathrow chief executive, John Holland-Kaye, said that despite the early boom after Covid restrictions were scrapped, the airport was expecting a difficult autumn. He said: “We’re seeing people who haven’t been able to travel getting in as many trips as they can when they can, and using up vouchers. Clearly that bubble is not sustainable.
“It will come back to normal fundamentals like the state of the world economy, the Covid restrictions worldwide, and the war in Ukraine. In the Gulf war our passenger numbers fell by 7% to 8%. And Ukraine is on our doorstep.
“I think we will see demand being suppressed. There’s a huge amount of uncertainty about what will happen after summer. We have to be realistic and make sure we have enough resource for the best case – but not depend on that happening.
He added: “So far in the pandemic our forecasts have been more pessimistic than others … but things have turned out worse.”
Passengers face a 2% increase in ticket prices, which Holland-Kaye described as “very affordable,” after the Civil Aviation Authority approved an initial 37% rise in landing charges in December. Heathrow has called for even higher charges for the next four years to help recoup losses.
A Virgin Atlantic spokesperson accused Heathrow of downplaying growth to secure an unjustified increase in charges, adding: “Despite the return of travel at scale, Heathrow is seeding doubt in the strength of demand so it can seek excess returns to shareholders and secure an unjustified increase in charges that would hurt UK competitiveness and consumers.
“We urge the CAA [Civil Aviation Authority] to ignore Heathrow’s cynical forecasts and conflicting statements, choosing instead the credible, independent evidence of returning demand, in order to make a decision on charges that puts consumers first.”
Holland-Kaye said the extra money was vital to allow fresh investment and avoid the “chaotic scenes” seen at other airports, such as Manchester this Easter. “You can see the impact on underinvesting when you look at other airports,” he said.
The Heathrow boss rejected suggestions that his own airport should have done more to avoid large queues during busy times. Heathrow has recruited more than 1,000 new security officers and will open terminal 4 by July, and said 95% of passengers passed through security within five minutes during the busy Easter getaway. However, it said a shortage of ground handlers and worker absence because of Covid had affected departure punctuality.
Holland-Kaye urged the government to tweak rules to allow HMRC to validate prospective employees through tax records, rather than requiring aviation businesses to call all previous employers as part of security. “It’s a ridiculous, old-fashioned system,” he said, adding it could allow checks to be done in an instant rather than weeks and would not diminish security.