London Heathrow Airport served 18 million passengers this summer, more than any other European hub, despite being hit harder than European rivals during lockdown.
After some chaotic scenes in early summer, after which a daily passenger cap of 100,000 was imposed, the airport claims that the vast majority of passengers had “good service” in recent months. As a result, the British Airways hub is removing the cap from Sunday October 30.
Heathrow CEO John Holland-Kaye commented: “Everyone pulled together this summer—ensuring 18 million people got away on their journeys. We have lifted the summer cap and are working with airlines and their ground handlers to get back to full capacity at peak times as soon as possible.”
The airport believes, through joint efforts, that it can keep capacity and demand in balance. It said in a statement: “We are working with airlines to agree a highly targeted mechanism that, if needed, would align supply and demand on a small number of peak days in the lead up to Christmas. This would encourage demand into less busy periods, protecting the heavier peaks, and avoiding flight cancellations due to resource pressures.”
Stronger Demand, But Not a Full Recovery
While demand has increased, it is far from fully recovered. Heathrow forecasts that total passenger numbers for 2022 will reach between 60-62 million, approximately 25% fewer than 2019. Headwinds of a global economic crisis, war in Ukraine and the continuing impact of COVID19 “mean we are unlikely to return to pre-pandemic numbers for some years, except at peak times” admitted the hub.
For now, the priority is to build back the airport eco-system to meet demand at peak times. To do so, businesses across the airport need to recruit and train up to 25,000 security-cleared people, a huge logistical challenge. Heathrow is establishing a recruitment taskforce to help fill vacancies and is working closely with the government on a review of airline ground handling and appointing a senior operational executive to invest in joint working.
Underlying losses at the biggest UK airport have increased to £400 million in the year to date because regulated income is failing to cover costs. This adds to the £4 billion in the prior two pandemic years. The airport says its balance sheet remains robust as it has protected liquidity and cashflow, and reduced gearing, during this difficult period.
Not Happy With Short-term Regulatory Focus
According to Heathrow management, the experience this summer “has shown that airlines will charge what the market will bear, regardless of how low the level of airport fees are.” This is commercially rational, but what consumers are telling the airport is that they value a smooth and predictable journey.
The airport's response to the UK’s Civil Aviation Authority’s proposals on the latest H7 regulatory settlement has highlighted a number of errors “which, if uncorrected, would result in insufficient investment in the service of current and future consumer needs.”
Holland-Kaye has therefore urged the CAA to “think again” in the direction of stimulating long-term investment, rather than focusing on short-term pricing. The CEO claims that this latter choice has only benefited airline profits.