Heathrow warns airline charges cap will dent revenues next year

  • Heathrow Airport expects 81.4m travellers in 2024, a 2.9% rise on this year
  • But the travel hub forecasts turnover next year dropping by 6.1% to £3.45bn
  • Passenger numbers jumped by 30% to 72 m in the first 11 months of 2023 

London Heathrow expects revenue and profits to decline next year despite the airport anticipating handling more than 2 million extra passengers.

Britain’s largest airport expects 81.4 million travellers in 2024, a 2.9 per cent increase on the 79.1 million it predicts coming through its terminals this year, as aeroplane travel continues its post-lockdown recovery.

However, it forecasts turnover dropping by 6.1 per cent to £3.45billion and adjusted earnings before nasties slumping by 16.1 per cent to £1.89billion in 2024.

Growth: Heathrow Airport expects 81.4 million travellers in 2024, a 2.9 per cent increase on the 79.1 million it predicts coming through its terminals this year

The British Airways hub blames the expected financial results on the Civil Aviation Authority’s decision to reduce the maximum amount it can charge airlines for every passenger they carry from £31.57 to £26.74.

As a result of the cap, Heathrow anticipates its aeronautical revenue falling by 11.3 per cent to £2.1billion, offsetting the expected growth in non-aeronautical income.

By comparison, Heathrow forecasts turnover climbing by more than a quarter this year thanks to a strong recovery in traffic, especially across the Asia-Pacific, where travel restrictions were only significantly loosened earlier in 2023.

Passenger numbers jumped by 30 per cent to 72 million in the first 11 months of 2023, with 6.1 million flying in November alone, just below pre-pandemic levels.

Heathrow has complained that the CAA’s ceiling on passenger charges will lead to lower investment and poorer customer service.

The group’s arrival punctuality levels have dipped slightly this year due to airspace congestion, negative weather events, and strikes by air traffic controllers in Europe.

Nonetheless, the airport plans to increase capital expenditure next year by half to £936million, with some funding going towards installing new security lanes, runway resurfacing and refurbishing cargo areas and main tunnels.

Its latest outlook comes amid suggestions that Saudi Arabia’s sovereign wealth fund could become the majority owner of Heathrow Airport.

The Public Investment Fund has partnered with private equity investor Ardian to purchase a 25 per cent stake worth £2.4billion in Heathrow from Spanish transport company Ferrovial, with the PIF’s holding totalling 10 per cent.

But according to the Sunday Times, one other major Heathrow investor is close to selling its stake to the PIF, while more are considering following suit.

Heathrow’s shareholders include sovereign wealth funds based in China, Qatar and Singapore, prominent Australian and Canadian pension funds, and the UK’s Universities Superannuation Scheme.

Among other holdings, the PIF owns Premier League side Newcastle United, runs the LIV Golf series, and recently acquired a 49 per cent stake in Rocco Forte Hotels.

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