Heathrow Airport endured its worst financial year in history in 2021, with passenger numbers falling to a near 50-year low due to the UK’s Covid-19 travel restrictions.
Bosses at the West London airport are now banking on a strong summer season to recover from the battering taken last year when 19.4 million people passed through its doors – the lowest number since 1972.
The UK’s changing travel rules system and the additional Omicron restrictions imposed late last year meant Heathrow was the only European airport to see a reduction in traffic. Cargo, mainly carried on passenger planes, was 12 per cent down on pre-pandemic levels.
Cost savings of £870 million ($1.18 billion) were accrued over the past two years but cumulative losses during the pandemic have risen to £3.8bn due to lower passengers and high fixed costs.
Bosses are hoping a surge in demand for travel over the summer months will boost footfall at the airport this year, although they reported lower-than-expected numbers in January and February.
Decades of flight from Heathrow - in pictures
Heathrow said the current number of passengers was 23 per cent behind forecast. Despite the sluggish start to the year, the airport – Europe’s busiest before the pandemic struck – expects to meet its target of 45.5 million passengers by the end of 2022.
This month, pre-travel and post-arrival Covid-testing rules for vaccinated travellers in England were scrapped, as was the 10-day isolation requirement for unvaccinated people.
But while the removal of rules in the UK has boosted outbound travel, testing requirements in other countries continue to affect inbound tourism and business travel.
Sixty-three per cent of Heathrow’s markets retain some form of travel restriction or testing requirements.
Aviation analyst John Grant told The National that Heathrow's recovery is hindered by the closure of important Asian travel markets such as China and Japan.
Heathrow chief executive John Holland-Kaye said the airport was working with airlines to boost services to cater to summer demand, with plans to reopen Terminal 4 by July.
He touched on the continuing dispute between the airport and airlines over Heathrow's plan to raise passenger charges, which are paid by carriers but usually trickle down to customers, by 90 per cent. The Civil Aviation Authority has granted a 37 per cent rise instead.
“While 2021 was the worst year in Heathrow's history, I am very proud of the way that colleagues focused on passengers and we were able to maintain our position as one of the top 10 airports in the world for service,” Mr Holland-Kaye said.
"Demand is now starting to recover and 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 per cent 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.”
During an interview with BBC Radio 4's Today programme, Mr Holland-Kaye acknowledged the coronavirus crisis had had a “really serious impact on our business”, causing it to report losses of £4bn over the past two years. However, he said Heathrow was “in good shape for the recovery” and is “well funded” to make a comeback and support the UK economy's recovery.
He refuted the argument from airlines that Heathrow was already considerably more expensive than European airports and that increasing prices even more would hinder economic recovery.
“I don’t think that is the case,” he said. “If you look at the charges at Heathrow relative to overall ticket prices, we’re very much in line with other airports and in fact the increase that we’re looking for is less than 2 per cent of the overall ticket price. So we think this is manageable. We will of course work with airlines to make sure we can bring down the costs over time."
A return to pre-pandemic travel levels cannot be expected until all travel restrictions are removed by governments and people can be confident these will not be reimposed, Heathrow said.
Despite falling passenger numbers, Heathrow customers continued to report high satisfaction rates, voting it as one of the world’s top 10 airports in 2021 in a Skytrax survey.