Heathrow Airport failed to return to profit in the opening six months of the year despite a strong rebound in passenger numbers.
Britain’s biggest airport reported a £139million adjusted pre-tax loss for the first half of 2023, against £321million in the equivalent period last year.
It blamed the result on a ruling by the Civil Aviation Authority, which capped the amount it could charge airlines for every passenger they carried.
Major losses: London Heathrow reported a £139million adjusted pre-tax loss for the first half of 2023, against £321million in the equivalent period last year
The regulator currently allows the airport to charge air carriers an average maximum of £31.57 per customer, a figure that is set to be reduced by about a fifth to £25.43 in 2024 and ‘remain broadly flat’ in the following two years.
Heathrow is appealing to the Competition and Market Authority to overturn the decision, which the CAA made in response to the post-pandemic recovery in travel.
The airport revealed 37.1 million people came through its premises in the opening half, a 42.1 per cent increase on the previous year’s levels and about 4 per cent below pre-pandemic volumes.
All markets saw a significant boost in passenger traffic, with the total flying to North America rising by half and Europe-bound customers growing by nearly a third.
Meanwhile, trips to the Asia-Pacific region more than doubled as the lifting of tough lockdown rules allowed airlines to expand or even restart flights to cities like Beijing and Shanghai.
This resurgence in overseas travel helped boost the travel hub’s turnover by 36.1 per cent to £1.74billion, although it said the removal of duty-free shopping meant average retail revenue per passenger declined.
The UK Government’s move to abolish VAT-free shopping for overseas visitors in 2021 has been blamed for driving away tourists to other popular European destinations, such as Milan, Paris and Oslo.
Heathrow’s outgoing chief executive, John Holland-Kaye, has been among hundreds of business leaders since May who have signed an open letter to Chancellor of the Exchequer Jeremy Hunt calling for the ‘tourist tax’ to be repealed.
Holland-Kaye is set to step down in October after nine years in charge, when he will be replaced by Thomas Woldbye, the CEO of Copenhagen Airport.
Before he departs, Heathrow expects a bumper summer season, although it warned that cost-of-living pressures represent a ‘material headwind for second-half demand’.
Inflation remains at elevated levels across the UK and Europe, due mainly to food and energy prices in the wake of the Ukraine war, while successive interest rate hikes have put significant pressure on homeowners.
Yet though prices in many tourist hotspots have skyrocketed, Britons and Europeans are still willing to take overseas summer holidays in large numbers, with many choosing cheaper destinations like Turkey.
Heathrow has beefed up its staffing to try and avoid the delays and cancellations that hit the airport last year when it was forced to impose daily passenger caps to cope with the unprecedented revival in demand.
Holland-Kaye said: ‘The summer getaway has got off to a great start, thanks to planning and close collaboration with airlines and their ground handlers.
‘I am immensely proud of what we have achieved as a team in the last nine years, transforming Heathrow into a world-class airport that Britain can be proud of.’
