UK. London Heathrow Airport today reported a sharp +8.8% leap in Q1 year-on-year retail revenue to £148 million. Retail revenue per passenger in the first three months rose by +6.4% to £8.62.
The company said: “Growth in retail income reflected benefit, particularly in duty and tax-free and airside specialist shops, from the depreciation of Sterling since June 2016 and increased passenger traffic. The redevelopment of Terminal 4’s luxury retail offering [including a new Gucci store -Ed], completed in late 2016, also contributed to growth.”
Duty and tax free income climbed by +10.3%, airside specialist shops by +20%, catering (food & beverage) by +9.1% and bureaux de change by +9.1%. Car parking revenue was flat.
Total company revenue in the quarter rose by +2% year-on-year to £655 million, with pre-tax profit up +17.4% to £27 million.
Passenger traffic increased by +2.2% to a record 17.2 million passengers on a total of 110,723 passenger flights. Underlying growth is estimated to have been +4-5%, adjusted for the non-recurrence of 2016’s leap year and different timings of Easter in the two years. In addition to domestic macro-economic factors, Heathrow Airport said there are “increasing signs that UK inbound demand, influenced by the depreciation of sterling, is driving growth”.
Intercontinental traffic was the key driver of traffic growth, increasing +2.6%, with more flights operated and more seats per flight, noted the company. Growth was particularly robust on routes serving the Middle East where passenger numbers increased +13.1%, reflecting more flights and larger aircraft, including additional A380 services from Emirates, Etihad and Qatar Airways and British Airways’ relaunched Tehran service in 2016.
The +3.2% rise in Asia Pacific traffic included growth on existing routes serving Malaysia, South Korea, Singapore and Vietnam and new services to Indonesia. In the first quarter of the year, North American traffic declined -1.1% partly due to adverse winter weather events on the eastern seaboard. Latin American traffic grew +1.4%, partly reflecting the launch of British Airways’ new service to Santiago while African traffic was lower partly due to reduced Nigerian services. European passengers increased by +1.8% with notable growth on routes to Italy, Portugal, Denmark and Russia.