28 FEBRUARY 2022

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Article from BTNews 28 FEBRUARY 2022

COMMENT: OAG reflects on the Heathrow results

It’s been a very tough couple of years for the whole aviation industry.

Much of the attention has been focussed on the airline sector where record losses have been reported and Government bailouts a regular occurrence. There was flexibility for some airlines who were able to redeploy aircraft to other parts of their networks or indeed start new routes in an attempt to stimulate demand. After all, aircraft are portable, airports generally are not!

Airports are a classic fixed asset, heavy on capital equipment and typically always investing in new projects (even if some of those never get to see the light of day). Today’s results from Heathrow are no surprise; fewer passengers than in 2020 when at least there were a few months of ‘normal’ demand at the beginning of the year. Losses of £3.8bn are therefore not surprising and the airport has certainly not endeared itself to airlines with some hefty increases in fees in the last few months. Pride has also been wounded by other airports in Europe recovering faster than Heathrow, and indeed based on current data for March 2022 the airport will rank in 11th place on the global list – however, if only international traffic is counted it moves to second position, but with nearly a million fewer seats than will be operated at Dubai; that’s some gap to close in the coming months!

Things can only get better.

For Heathrow brushing the 2021 performance under the carpet makes sense because things can only get better, and indeed they already are! The easing of all Covid-19 restrictions in the UK from tomorrow is the biggest sign that the industry is recovering, although Heathrow like every other airport remains at the mercy of overseas authorities easing their entry requirements even further.

So, how is the summer shaping up at Heathrow?

The summer 2022 IATA season commences on Sunday 27 March and typically airlines add more and more capacity so that by early June the peak operating programme is in place and airports are crammed with both business and leisure travellers. Unlike previous years there will be some uncertainty from airlines as they watch for any new variants of Covid-19 impacting travel but it looks like Heathrow will be getting back to something near normal levels, at least from a capacity perspective. Current planned capacity for summer 2022 is 29.2m vs 29.6m in summer 2019, a shortfall of less than 2% although we should expect that to shake down a bit. Compared to summer 2020, capacity will have increased fourfold and against last summer nearly tripled…great sound bites for the optimist.

The Editor-in-Chief of Business Travel News adds that the cost of operating at Heathrow can be highlighted by a typical BA New York flight booked for next October presently at remarkable prices.  Outbound the fares start from £234 with the return charged at £105.  The difference is easily explained.  UK government taxes and Heathrow charges.

www.oag.com

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Andrew Sharp, United Kingdom

There will be taxes levied by the US too, don't forget.


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