…By Jack Sylva for TDPel Media.
Heathrow Airport has posted a £139m loss in Q1 2023, putting it on track for its fourth consecutive year in the red.
Despite a 74% increase in passenger numbers in the first three months of this year, CEO John Holland-Kaye stated that nothing could be done to return Heathrow to profitability, blaming an unfavourable decision on take-off and landing fees by the Civil Aviation Authority (CAA).
Heathrow last made a profit in 2019, with the Covid years from 2020 to 2022 bringing huge losses.
The CAA confirmed last month that the maximum charge per passenger would fall by 20% from £31.57 in 2023 to £25.43 in 2024, remaining at that level until 2026.
In a statement, Heathrow said the CAA had made “clear errors” and appealed to the Competition and Markets Authority, with a decision expected in mid-May.
If the appeal is successful, a final decision is expected between August and October.
Chief financial officer Javier Echave stated that Heathrow had strong liquidity and very prudent gearing well below pandemic levels.
Despite the loss, Holland-Kaye stated that Heathrow was building its route network to connect Britain with growing markets, and he urged the government to scrap the ‘tourist tax’ to entice international visitors back to the UK.
Commentary
Heathrow Airport’s loss comes despite a significant uptick in passenger numbers in Q1 of 2023, as Covid restrictions have eased, suggesting that the CAA’s reduction in charges may have had a significant impact on the airport’s profitability.
The airport has lost out on around £4bn in revenue during the pandemic, and it appears that it is facing further challenges in returning to profitability.
The legal appeal by the airport highlights the tensions between airport operators and regulators, with airports seeking to balance their bottom line with the interests of passengers and airlines.
As such, it remains to be seen whether the Competition and Markets Authority will grant Heathrow’s appeal and the implications for the UK’s largest airport if it is unsuccessful.