UK. London Heathrow Airport retail revenue climbed by a robust +7.7% year-on-year in 2017 to £659 million. The key figure of retail revenue per passenger rose by +4.5% to £8.45.
The growth in revenue was aided partly by a +3.1% rise in passenger traffic to a record 78 million. It also reflected a greater contribution from airside commercial activities (up two percentage points versus 2016) and increased retail spend per customer.
Retail concessions grew by +10.5%, reflecting the depreciation of sterling since June 2016, with a strong performance from duty and tax free and airside specialist shops, noted the airport company. The redevelopment of Terminal 4’s luxury retail offering, completed in late 2016, also contributed.
Food & beverage also saw strong growth from increased passenger traffic, the redevelopment of Terminal 5 catering outlets and more passengers choosing to buy food from terminals before boarding their flights. In other retail activities, growth in advertising revenues was offset by some underperformance in bureaux de change as a result of increasing competition.
Car parking revenues rose +5.3% driven by increased passenger numbers and a more “dynamic pricing strategy,” said Heathrow. Higher car rental revenue from a change in arriving passenger mix and increased volumes in VIP services drove other services income up by +9.4%.
In the year ended 31 December 2017, total revenues climbed by +2.7% to £2,884 million and Adjusted EBITDA rose by +4.6% to £1,760 million.
Long-haul traffic drives growth
Intercontinental traffic was the main geographic driver of traffic growth, increasing by +3.6%. Passenger numbers to and from the Middle East increased by +9.5%, supported by larger aircraft, including additional A380 services from Emirates, Etihad and Qatar Airways, and more flights, including additional services from Oman Air.
The +4.5% rise in Asia Pacific traffic was driven by substantial growth in load factor on existing routes serving Malaysia and new or increased services to Thailand, Philippines and Vietnam. North American traffic rose +1.1% and Latin American traffic grew +5.5%, due to more flights and fuller aircraft serving the region. European traffic increased by +2.4% due to fuller, larger planes with notable growth on routes to Italy, Russia, Belgium, Denmark, Netherlands and Portugal with over 70,000 extra passengers in each market. Flybe’s new Scottish services contributed to the +3.3% growth in domestic traffic.
Heathrow CEO John Holland-Kaye said: “Heathrow had a fantastic 2017 – welcoming a record 78 million passengers, giving our best service ever and offering better value for our passengers with lower airport charges. But while we are squeezing out small bits of growth, our rivals in France and Germany are overtaking us – for Britain to thrive post-Brexit, the Government needs to crack on with Heathrow expansion as quickly as possible with a vote in Parliament before the summer.”