What is the reason for the poor financial performance of UK airports?
When are the UK airports expected to improve?
Heathrow Airport recorded the worst fiscal year in history in 2021, with the number of passengers at the airport reaching its lowest level in 50 years due to Covid-19 restrictions in UK.
Forecast the improvement of UK airports in the coming months
Officials at Heathrow Airport in west London are forecasting a booming season next summer to offset some of last year’s losses, at which 19.4 million people passed through the airport gates (the lowest number since 1972). Changes in UK travel laws and restrictions on the Omicron outbreak late last year have made Heathrow the only European airport to see a drop in passenger traffic. According to the report, Cargo, which are mainly transported by passenger planes, also decreased by 12% compared to the pre-epidemic level.
Reduction of passengers at UK airports during the Covid-19 epidemic
Although the airport has saved £870m in costs over the past two years, the center’s losses increased during the Covid-19 epidemic to £3.8bn due to reduced passenger traffic and high fixed costs. Officials and employers at the airport hope that the increase in demand for travel in the summer months will lead to 45.5 million passengers using the airport this year, but that the number of passengers will be lower than expected in January and February. Heathrow Airport also said its current number of passengers was 23% lower than expected. Despite a poor start to the year, it is expected to reach its goal of 45.5 million passengers by the end of 2022.
Cancel flights with unprecedented storms
Hundreds of incoming and outgoing flights were canceled and trains and ships stopped due to the unprecedented and severe storm Eunice in UK. Hurricane Eunice, which caused strong and rare winds in UK, canceled hundreds of domestic and international flights from the destination to the UK, causing much chaos among passengers. The Met Office has issued a red alert in some southern coastal areas. Winds can reach more than 100 miles per hour, which can damage buildings and trees, according to the agency. British Airways (BA), the world’s ninth largest airline, has announced that it has canceled at least 80 flights in and out of London airports. The airline said in a statement that it expects severe weather conditions at UK airports due to Hurricane Eunice, which could cause significant disruption.
Severe drop in passengers at UK’s largest airport
UK’s largest airport, Heathrow, which used to carry 6.5 million passengers a month before the Covid-19 crisis, continues to suffer from a sluggish tourism market despite the lifting restrictions, handling just 2.6 million passengers in September last year. This is equivalent to 38% of the number of passengers who used to travel through this airport before Covid-19. Much of the decline has been attributed to a drop in North American traffic. The cargo sector at Heathrow Airport also reportedly saw a 7% drop in the same period last year. This shows the depth of damage that the Covid-19 crisis has inflicted on the transportation and distribution cycle of goods.
Loss of £3.8 Billion at Heathrow Airport
Heathrow Airport has lost £3.8 billion due to a sharp drop in air travel. The airport added a new tax to passenger fares a few months ago to offset some of the damage. The tax, which is set at £8.90 per person, is added to airline ticket prices and paid for at the airport. Despite months of new tariff increases, a sluggish tourism market and declining air travel figures continue to put significant pressure on Europe’s third busiest airport.
56% increase in passenger tax
Heathrow International Airport intends to cover part of the financial damage caused by the slump in the air travel market over the past two years by raising passenger taxes by 56 per cent. The UK’s Civil Aviation Authority has agreed to the proposal. Decisions on the exact amount of the tax are set to take effect in the summer of 2022. This tax is added to the passenger ticket price by the airlines and is paid at the airport.
Airline chiefs criticize tax increases
The 56 percent increase, meanwhile, has drawn widespread criticism and opposition from airline executives and executives, who have called it a shameful move. They call Heathrow executives monopolists. Heathrow has announced that the increase will be implemented temporarily to offset the airport’s financial losses; But critics worry the decision could become irreversible.
Changing travel rules to the UK
In the new travel system, UK has eased entry rules for travelers who have been vaccinated twice before and are not imported from red countries. Since late October 2021, travelers’ commitment to expensive PCR testing has shifted to cheap and fast Covid-19 testing. Thus, only when the passenger test is positive should he / she quarantine and apply for a PCR test, which is free for British citizens.
The Covid-19 crisis for the European aviation industry is unprecedented since 1955, and experts say the industry is not expected to recover until 2023. UK airports performed the worst financially last year, and the British aviation industry is expected to take a long time to reach pre-epidemic level of Covid-19.
