Heathrow claims pandemic strengthens case for expansion

The airport's results for the year ended 31 December 2021 – published today – show that passenger numbers fell to 19.4M, the lowest since 1972, and it recorded losses of £1.8bn.

However despite these challenges, airport bosses are standing by the need for its expansion.

"While we have paused work to expand Heathrow during Covid-19, the crisis has shown the pent-up demand from airlines to fly from Heathrow, as well as how critical Heathrow is for UK’s trade routes and the risk to the economy of Britain relying on EU hubs which can close borders overnight," the airport said.

"We will review our plans for expansion over the course of the next year."

The third runway would boost the airport’s capacity by 50%, allowing it to handle up to 280,000 extra flights a year. The project came through its court battle in late 2020, when the Supreme Court overturned the ban on the expansion.

Despite the court win, the £14bn expansion plans have remained on ice due to the pandemic and in March 2021 the airport put its £900M T5 rail link on “controlled pause”, citing lack of funds.

Nonetheless, the third runway project still seemed to be in the works in May, as Heathrow resumed purchasing houses in proximity to the proposed site. The project received another boost in September when the Department for Transport opted not to review its Airports National Policy Statement.

Cost reduction has helped to stem losses, with Heathrow achieving £870M of cost savings over the last two years, but cumulative losses during the pandemic have now risen to £3.8bn due to lower passenger numbers and high fixed costs.

However Heathrow chief executive John Holland-Kaye emphasised that "demand is now starting to recover".

He said: "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.”

Holland-Kaye added that "while 2021 was the worst year in Heathrow's history", he is proud of colleagues' continued focus on passengers.

The airport's 19.4M passengers in 2021 was a decrease from the 22.1M recorded in 2020.

Passenger numbers currently remain 23% behind forecast, but a strong summer for outbound tourism is predicted. As such, despite lower than expected passenger numbers in January and February, the airport is expecting to meet its 2022 target of 45.5M passengers.

Inbound tourism and business travel remain key challenges. The removal of testing restrictions in the UK has boosted outbound tourism demand, but inbound tourism and business travel are suppressed due to testing in other countries.

HAL doesn't expect travel to return to pre-pandemic levels until all restrictions have been removed, passengers can travel with no checks and are confident that restrictions will not be reimposed.

The airport's plans for net zero aviation by 2050 do, however, remain on-track. It recently updated its Heathrow 2.0 plan for sustainable growth, although aviation experts have said it does not adequately factor in expansion emissions and relies too heavily on the development of negative emission technologies.

The sustainability strategy follows research from the NEF last month which revealed that emission clean up costs from departing flights at the eight airport expansions underway across the UK have more than doubled to £73.6bn.

The government has, however, committed itself to achieving net zero within the aviation sector in its recently-published Transport Decarbonisation Plan. It has also recently consulted on a Net Zero Aviation Strategy, setting out how industry will play its part in delivering the country's net zero commitments.

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