London: Heathrow Airport Holdings’s departing CEO, John Holland-Kaye, struck a cautious tone about strength of air travel in the latter part of the year as the cost-of-living crisis weighs on more leisure customers and corporate travel continues to linger below pre-pandemic levels.
While “demand has defied gravity” this summer, the question is whether it will continue to do so for the rest of 2023, said the CEO, who is stepping down in October. Heathrow might see a softening in demand for leisure travel in the second half as passengers feel the pinch from higher consumer prices amid soaring inflation, he said.
The executive’s comments follow muted releases by discount specialist EasyJet and Ryanair Holdings in the past week. The Irish budget carrier said on Monday it might reduce the price of tickets this winter in order to fill seats as inflation holds passengers back from spending.
Meanwhile, business travel hasn’t yet hit pre-Covid levels, with 30 per cent of passengers at Heathrow considered corporate, compared with 34 per cent before the pandemic. Holland-Kaye said it might take a few years for the segment to reach normal levels. Many passengers are also combining their getaway with business activities and personal leisure, a travel tactic known as “bleisure.”
Heathrow reported 37 million passengers in the first half, compared with 26 million in the same period last year. London’s largest airport hasn’t escaped the strikes in the aviation industry this year. More than 1,400 of its security workers walked out during the Easter period over pay, but Holland-Kaye said the strike wasn’t disruptive and “nobody will have noticed.”