Heathrow has announced that passenger numbers and profits are expected to decline this year as a result of the ongoing war in the Middle East. Europe's busiest airport forecasts a 1.1% drop in total passengers to 83.6 million, attributing the downturn to the conflict involving Iran affecting global air travel.
Impact of Middle East Conflict on Traffic
In its latest investor report, Heathrow stated: "The ongoing conflict in the Middle East is putting notable downward pressure on traffic. This reflects the risk that continued volatility in the Middle East could dampen traffic volumes, with impacts extending beyond the region to global travel demand over the remainder of the year." Despite this, the airport reported a 0.7% increase in passenger numbers to 32.8 million in the year to the end of May, driven partly by increased connecting traffic as other hubs were affected by the regional conflict.
Profit Decline Forecast
Heathrow also expects profits to fall by £147 million year-on-year, and £60 million below its previous forecast from December. The airport reported adjusted profits of £2.03 billion last year and now projects £1.88 billion for this year. The company noted it has been "engaging closely" with its regulator, the Civil Aviation Authority, to discuss the costs associated with its planned third runway.
Third Runway Economic Benefits Questioned
Earlier this month, the Department for Transport (DfT) released documents suggesting the economic boost from a third runway at Heathrow could be significantly lower than previously estimated. Government analysis indicates the runway would boost GDP by up to 0.05%, a 90% reduction from the earlier 0.5% estimate, and the overall trade-off could cost the UK as much as £62.5 billion.
Heathrow responded, stating the analysis did not fully account for trade benefits. A spokesperson said: "When the benefits of increasing UK trade by £150bn a year and £33bn of private capital to expand Heathrow aren’t captured by this economic assessment, it clearly doesn’t represent the full picture. The government itself is clear that the model is extremely limited and only designed for publicly funded projects. It doesn’t capture any value from increased trade, inbound tourism or massive private investment into UK supply chains, businesses and steel producers. It’s not fit for purpose and needs to be reformed to capture these clear benefits."
Health and Wellbeing Concerns
Analysis for the DfT also found that expanding the hub airport could have "major adverse" effects on the health and wellbeing of up to 3 million local residents. The report by consultants Aecom highlighted that construction and operation of the third runway would worsen noise and air quality, and could harm access to housing, education, healthcare, open space, and transport.
In May, Heathrow's new chair initiated talks with airlines and billionaire local landowner Surinder Arora to defuse a row threatening further delays. The spokesperson added: "Our expansion plans are widely supported by businesses and trade unions across the UK because they understand the transformative difference this project will make with improved prosperity and new job opportunities for their communities."
