A bumper billion-pound holiday season in which it processed more passengers than ever before has lifted Heathrow to within £19 million of breaking even.
However, passengers are being more careful with their money, spending less than they did previously in terminal retail outlets. The cashcow, premium-priced Heathrow Express rail service from Paddington is also losing out to competition from the cheaper Elizabeth Line run by Transport for London.
Heathrow is making up the money elsewhere, with car parking and airline take-off and landing charges soaring.
Latest filings show that from the beginning of July to the end of September, the aviation industry’s peak period of the year, Britain’s biggest airport handled 22.3 million passengers and made profits of £120 million on revenues of just shy of £1 billion. Compared with the prepandemic third quarter of 2019, Heathrow’s passenger numbers are a shade up, while its revenues have soared by 19 per cent. Its profitability, though, is 16 per cent lower.
For the first nine months of the year, it reported £2.73 billion of revenue from the 59.4 million passengers that passed through. The profitable third quarter was offset by heavily lossmaking months earlier in the year and for the nine months as a whole the airport was £19 million in the red.
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Comparable pre-Covid figures show that in the first nine months of 2019 Heathrow had revenues of £2.3 billion, from which it made a profit of £297 million.
Passengers this year have spent an average of £8.65 going through the airport, compared with £8.79 in 2019. Spending in retail concessions is down 25 per cent, although inflated prices for food and drink have meant that catering income has risen by 25 per cent.
Revenue from the Heathrow Express is down by 15 per cent, but income from car parking has leapt by 34 per cent. A £5 drop-off charge was introduced in November 2021.
Income from take-off and landing fees — charges that are made to airlines and are passed on in passenger fares — now make up two thirds of the airport’s turnover, having increased by 33 per cent to £1.83 billion over four years.
What will continue to hold back the airport’s financial recovery is the interest rate charges it pays on its £15.8 billion of debt. In the first nine months of this year Heathrow, which is owned by a consortium led by Ferrovial, the Spanish infrastructure group, spent £1.2 billion servicing its debt. Four years ago that figure was £582 million.
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Thomas Woldbye, 59, who has been brought in as Heathrow’s new chief executive after a decade under John Holland-Kaye, 58, said: “Our best days lie ahead. We’ve got a clear plan to build an even stronger hub for Britain in the next decade.”
