UK. London Heathrow Airport has said that passenger numbers have remained subdued in January and February but that it expects a “strong Summer for outbound tourism”. The airport company confirmed that it plans to reopen Terminal 4 by July to cope with demand, and aims to reach its projected 45.5 million in passenger numbers this year, more than double 2021 figures. The news emerged as Heathrow posted its 2021 results today.
Last year passenger traffic of 19.4 million was the lowest at the airport since 1972. Heathrow was the only European hub to see a reduction in traffic due to the UK’s tight rules, notably on inbound travellers.
The airport company said that inbound tourism to the UK and business travel remain challenges. In a statement, Heathrow said: “Removing testing restrictions in the UK has boosted outbound tourism demand, but inbound tourism and business travel are suppressed due to testing in other countries. 63% of our markets retain some form of travel restriction or testing requirements, and government responses to Omicron show how uncertain broader travel demand remains. We don’t expect travel to return to pre-pandemic levels until all restrictions have been removed, passengers can travel with no checks and are confident they will not be reimposed.”
Heathrow also stated that the pandemic has “strengthened the strategic case for expansion”. It noted the pent-up demand from airlines to fly to Heathrow, as well as the airport’s role in UK trade routes.
Heathrow’s 2021 revenue increased by +3.3% year-on-year to £1,214 million, with Adjusted EBITDA up +42.2% to £384 million. The company recorded a £1,613 million loss after tax, following a loss of £1,785 million a year earlier.
Retail revenue declined by -7.3% to £217 million, driven by reduced passenger numbers. But importantly, the company highlighted “relative resilience” in Q4 as the relaxation of government restrictions allowed the reopening of all units across Terminals 2, 3 and 5. Retail income now and in future is also likely to be hit by the government’s decision to abolish VAT free shopping from 1 January 2021, as reported.
Heathrow stated: “The decision will impact our pricing proposition and that of retailers and an example is the closure of Dixon’s Travel in H1 2021. As we see passenger volumes return during 2022 this impact will become more apparent.”
Retail revenue per passenger increased +5.8% to £11.19 across the year.
Heathrow CEO John Holland-Kaye said: “While 2021 was the worst year in Heathrow’s history, I am very proud of the way that colleagues focussed on passengers, and we were able to maintain our position as one of the top 10 airports in the world for service.
“Demand is now starting to recover and we are working closely with airlines to scale-up our operations and reopen Terminal 4 for the summer travel peak. We’re excited to welcome more passengers back to Heathrow to experience the joys of travel and get Britain’s economy firing on all cylinders again.
“To deliver this, we have outlined an investment plan for the next five years which meets the needs of passengers, drives fast traffic recovery and incentivises investment in a critical national asset, while keeping the increase in ticket prices below 2% despite significantly fewer passengers. I am anxious that the CAA will undercook the investment needed to avoid the return of ‘Heathrow hassle’ with longer queues and delays.”
