Heathrow raises forecast as King Charles coronation kick-starts busy summer

Heathrow passenger numbers reached 95 per cent of pre-pandemic levels in the first quarter, prompting it to lift 2023 forecasts, the British airport said on Wednesday, adding that it was prepared for a busy summer starting with the coronation of King Charles.

Seeking a slice of the royal action, Britain and Europe’s busiest air travel hub, had wanted to name its Terminal 5 after King Charles but he declined the offer on environmental grounds, the Times reported on Wednesday.

Asked about the matter, Heathrow CEO John Holland-Kaye said the airport was proud of its association with the royal family - Terminal 2 is named the Queen’s terminal - and it would celebrate the May 6 coronation in other ways.

“The naming of infrastructure is a question for the Cabinet Office,” Holland-Kaye told Reuters.

Heathrow now expects between 70 million and 78 million passengers this year, up from the 58 million to 73 million it had forecast in February but not quite catching up with the 81 million passengers in 2019 before the COVID-19 pandemic.

Strong demand for Caribbean holidays and a recovery in domestic flights lifted passenger numbers in the January to March period. But the company posted a 139 million pound ($173 million) first-quarter adjusted loss despite the 74 per cent rise in traffic.

The airport blamed landing fees the airport charges airlines, which are set by the sector regulator, saying they were “too low”. It is appealing against the regulator’s decision.

“The airlines have been able to put their prices up,” Holland-Kaye said. “We are still loss-making while the airlines are returning to profit.” Heathrow’s operations have been resilient despite strikes by security staff in the first part of the year, he said.

Holland-Kaye is due to step down this year after the board has appointed a successor.

Business travel held back by economy, job cuts

The rapid rebound in air travel continues to be dominated by leisure passengers, while corporate bookings are held back by economic uncertainty and job cuts, Holland-Kaye added.

“When we look at demand, we haven’t seen business travel come back to the level it was pre-pandemic,” he said in an interview to Bloomberg. “We can all see that with a lot of economic uncertainty in the world, with cutbacks among some of the big users of travel - the banks, the tech companies - that it’s not surprising that it hasn’t fully recovered to where it was. I think it will get back.”

The aviation industry has seen demand swell after travel restrictions were eased and borders reopened. But a revival of high-yield business travel is crucial for the return to profitability for airlines. The technology sector has been hard hit by a wave of layoffs at companies from Amazon.com Inc. to Meta Platforms Inc., while the banking industry is reeling from the recent collapse of Silicon Valley Bank and the bailout of Credit Suisse Group AG.

With inputs from Reuters and Bloomberg