The Terrible Financial Situation of British Airways have raised concerns and obscured the future of the industry. The situation is so dire that experts and British airport chiefs predict it will take several years for the situation to improve. The head of the UK’s largest airport said it was unlikely that the airport’s financial losses due to the Covid-19 pandemic would be offset for another five years, when passenger numbers are predicted to return to pre-Covid-19 times. The multi-billion-dollar loss to British Airways comes as Covid-19 cases rise again and restrictions may be re-imposed.
A $3.4 Billion Loss for UK’s Largest Airport
The terrible financial situation of British Airways can be seen in the amount of damages it has suffered. Heathrow has lost $3.4 billion since the beginning of the Covid-19 outbreak. The number of passengers has increased by 28% in the last quarter of this year and the freight sector by 90%, but the boss of Heathrow Airport and experts do not believe that the situation will return to normal for another five years. Meanwhile, French airport operator ADP has predicted that air traffic at this airport will not be restored to its previous volume before 2024. Last year, Heathrow, which hosts many short and long haul flights, ceded the title of Europe’s most crowded airport to Paris Charles de Gaulle Airport (CDG).
A 56% Tax Increase, Reduction of Health Protocols
The airport is trying to make up for some of its losses by raising passenger taxes by 56% and reducing health protocols. Airport officials say the dire financial situation of British Airways has forced them to take such measures. The UK’s Civil Aviation Authority (CAA) has agreed to a proposed passenger tax increase of around 34.40 pounds per person. The airport planned to raise taxes by 90% and more quickly compensate for the heavy losses caused by the Covid-19 pandemic. If this happens, the passenger tax will be equal to 83 pounds.
Opposition to a 56% Increase in Passenger Taxes
The 56% increase in passenger taxes has been widely criticised and opposed by airline executives who have called it a shameful move. They call Heathrow executives monopolistic individuals. But John Holland-Kaye, boss of Heathrow Airport, has said that stocks have had a negative growth over the past 15 months and the dire financial situation of British Airways has forced them to do so.
Unprecedented Reduction of European Air Passengers After Covid-19
Before the Covid-19 outbreak, about 81 million passengers were handled annually by Heathrow Airport. But this year, only 13-36 million people are expected to travel through the airport. The terrible financial situation of British Airways is precisely due to the sharp decline in the number of passengers. Holland-Kaye says the government’s focus should be on completing the vaccination process so that the country’s borders can be opened without the need for a Covid-19 test. The Covid-19 crisis for the European aviation industry has been unprecedented since 1955. Many hope that international traffic will improve after November 8, when travel restrictions on vaccinated people will be reduced.
Daily Losses of £3 Million at London Heathrow Airport
London Heathrow Airport (LHA) has announced that it is still a loss-making airport, despite improvements for the first time in a full quarter since 2019, before the onset of the Covid-19 crisis. Heathrow Airport has lost $3.4 billion at the start of the pandemic and continues to lose £3 million a day. However, after the number of passengers at the airport reached 28% during the third quarter of 2021 and cargo reached 90% of pre-pandemic levels, the airport is moving towards recovery.
Air Traffic Will Not Improve for Another Five Years
The Terrible Financial Situation of British Airways will continue for several years. Heathrow Airport predicts that air traffic will not fully recover until at least 2026, even though the air travel industry began its recovery in the third quarter of this year as Covid-19 restrictions eased around the world. “We are on the cusp of a recovery which will unleash pent-up demand, create new quality jobs and see Britain’s trade roar back to life — but it risks a hard landing unless secured for the long haul,” Holland-Kaye said. He added that the continued focus on the global vaccination programme and simpler rules for Covid-19 testing would help secure the airport’s future. According to the report, Heathrow received 10.2 million passengers in the nine months to September 30, down from 19 million in the same period last year.
A Sharp Drop in Revenue for British Airports
The decline in airport revenue has led to a dire financial situation for British Airways. Revenues for London Heathrow Airport fell 27% to 695 million pounds. Loses of $3.4 billion since the Covid-19 outbreak represent a long way to go, especially as airports have very high fixed costs despite more than a 30% reduction in operating costs.
Reduced Travel Restrictions Demanded by British Airways
The Terrible Financial Situation of British Airways has been forced to ask the government to reduce Covid-19 restrictions. London Heathrow Airport and British Airways have called for travel restrictions on vaccinated passengers to be lifted. They warned that, otherwise, they would face the loss of more jobs. The strict rules now imposed by the UK government have left the British travel sector in recession. Europe’s travel sector, meanwhile, has improved somewhat.
Boris Johnson Government Measures to Improve Air Travel
The UK government has announced that it will remove the remaining seven countries on Covid-19’s list of high-risk areas to strengthen the tourism and air travel market. Transport Secretary Grant Shapps has stated that not all people vaccinated against Covid-19 will need mandatory quarantine. Ecuador, the Dominican Republic, Colombia, Peru, Panama, Haiti, and Venezuela, are currently on the list of high-risk countries, or the so-called Red List. The Terrible Financial Situation of British Airways has prompted the government to take measures that could lead to the re-emergence of Covid-19 in the country. The UK government’s decision to eliminate high-risk countries came after the top medical adviser said the spread of new variants of the Covid-19 was not a cause for concern.
Air travel figures have plummeted since the Covid-19 outbreak, and experts predict that the situation will not return to normal for another five years. The continuation of this situation will lead to the bankruptcy of British Airways. The abysmal financial position of British airways has come when statistics show that Covid-19 is once again peaking in the country. This could completely shut down the British aviation industry. Therefore, it is necessary for the government of Boris Johnson to think of temporary measures to solve the issue. Otherwise, the future of this industry could be catastrophic and lead to the unemployment of many people who work in this sector.