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Heathrow halves losses but warns of cost of living pressures

Heathrow left its prediction for passenger numbers for 2023 unchanged at between 70 and 78 million, compared with 81 million in 2019…reports Asian Lite News

London’s Heathrow Airport said it made a loss in the first half of this year, partly because of the H7 ruling by the Civil Aviation Authority that kept the revenue it charges airlines per passenger “too low”.

As passenger numbers continued to recover from the Covid pandemic, Heathrow cut its losses in the first half to £139 million ($179.2 million) from £321 million in the same period last year, but said its balance sheet is strong, with “gearing well below pre-pandemic levels and £4 billon of liquidity, sufficient to cover all of our commitments for at least the next 24 months”.

Heathrow said 37.1 million passengers passed through in the first six months of 2023, which included some of the busiest days on record.

That’s a 42 per cent rise on the same period in 2022, but is 4 per cent below the first half of 2019, before the pandemic.

Heathrow left its prediction for passenger numbers for 2023 unchanged at between 70 and 78 million, compared with 81 million in 2019.

“The summer getaway is off to a great start, thanks to planning and close collaboration with airlines and their ground handlers, said Heathrow chief executive John Holland-Kaye, who is due to leave in October and will be replaced by Thomas Woldbye, the current boss of Copenhagen Airport.

“I am immensely proud of what we have achieved as a team in the last nine years, transforming Heathrow into a world-class airport that Britain can be proud of,” Mr Holland-Kaye added.

“Heathrow is now a leader in sustainability, with a diverse culture that reflects our local community and can attract the best talent from around the world.”

However, the airport said overall passenger numbers are consistently below pre-pandemic levels, and “the cost-of-living crisis is a material headwind for second-half demand”.

Some experts predict a fall in demand within the UK travel industry as a whole in the second half of the year, as higher interest rates and inflation take their toll on household budgets, and this could result in cheaper airfares.

“We’re going to see prices come off and we’ll see more price wars emerge again, which we haven’t seen for some time,” Paul Charles, chief executive of the travel consultancy, The PC Agency, said.

“We’ll see the emergence of the price war on certain routes, and Heathrow should be able to benefit from that, because demand should be created by these price wars.

“It’s going to be an exciting time for consumers because they will see more realistic pricing. But it will be a challenging time for the industry as it adjusts from a period of very high pricing to something more realistic for consumers,” he added.

Meanwhile, Heathrow Airport said it would be appealing against the H7 ruling, which had been lowered by the CAA when passenger numbers recovered after the pandemic. Airlines have complained that the charge-per-passenger rate is still too high.

The rate is an average maximum of £31.57 ($37.40), which is expected to fall by about 20 per cent to £25.43 ($30.19) per passenger in 2024.

It’s been a tricky balancing act, Roger Appleyard at RBC Capital Markets told The National, but the CAA has, broadly speaking, got it right.

“Although the CAA has been on the harsh side, as you wouldn’t argue the shareholders of Heathrow have made decent returns in the past,” he added.

Heathrow also said up to £3.7 billion would be spent on passenger service improvements, which will include the replacement of the Terminal 2 baggage system and streamlining security in all terminals.

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Heathrow extends cap on passengers through Oct

Tens of thousands of flights have already been cancelled this summer as the industry struggles to cope with the demand for air travel amid staffing shortages…reports Asian Lite News

London’s Heathrow Airport has announced that it will extend its cap on passenger numbers for another six weeks as the aviation sector continues to struggle to cope with demand for travel.

No more than 100,000 travellers will be able to depart per day until October 29, the largest airport in Britain said on Monday.

It said the move was taken following an improvement in punctuality and fewer last-minute cancellations after introducing a temporary cap in July, reports dpa news agency.

The capacity limit of 100,000 daily departing passengers was initially to last until September 11, but that date was now pushed back.

Tens of thousands of flights have already been cancelled this summer as the industry struggles to cope with the demand for air travel amid staffing shortages.

Many passengers flying to and from the airport have suffered severe disruption in recent months, with long security queues and baggage system breakdowns.

Heathrow said the cap imposed in July had resulted in “fewer last-minute cancellations” and “shorter waits for bags”.

It added the capacity limits would be kept under review and “could be lifted earlier should there be a sustained picture of better resilience and a material increase in resourcing levels”.

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BA suspends sales of short-haul tickets from Heathrow

British Airways (BA) has reportedly suspended selling short-haul flights from London’s Heathrow Airport for at least a week…reports Asian Lite News

British Airways has halted sales of tickets on short-haul flights from Heathrow Airport until 8 August as disruption to air travel continues.

The move is due to the cap on daily passenger numbers that the UK’s largest airport has imposed over the summer.

The sales suspension will affect BA’s flights to domestic and European destinations. Thousands of air travellers have been hit by disruption in recent weeks, including last-minute cancellations.

Airports and airlines, which cut jobs during Covid lockdowns, have found it difficult to recruit enough staff as demand for holidays has returned.

Heathrow Airport has struggled to cope with the rebound in air travel and problems with its baggage handling systems have also led to passengers seeing huge delays in reclaiming their luggage.

Last month, Heathrow told airlines to stop selling summer tickets, as it said it would limit the number of passengers departing each day to 100,000 – 4,000 fewer than previously scheduled. The cap on numbers is set to remain in place until 11 September.

As BA is the largest airline at Heathrow it is affected by the limit more than other carriers.

In a statement, BA said: “As a result of Heathrow’s request to limit new bookings, we’ve decided to take responsible action and limit the available fares on some Heathrow services to help maximise rebooking options for existing customers, given the restrictions imposed on us and the ongoing challenges facing the entire aviation industry.”

Julia Lo Bue-Said, chief executive of travel agent industry body Advantage Travel Partnership, told the BBC the move was “positive news” for consumers.

“The whole idea is that you allow space on flights for anybody that is on a flight that has been disrupted – it enables [BA] to scale up,” she said.

“In one sense it sounds quite counter-intuitive that an airline would be reducing seats at its peak period but it’s absolutely all about building resilience, making sure there’s less disruption, ensuring that those people that have booked… that there’ll be less risk to those flights being disrupted.”

However, BA’s suspension of ticket sales already appears to have had an impact on prices.

On Tuesday morning, a direct flight from Heathrow to Barcelona this coming Saturday cost a minimum of £650, compared with £295 the following weekend, according to flight comparison website Skyscanner.

Flights from Heathrow to Frankfurt cost upwards of £553, compared with £248 the following weekend.

It comes after Emirates last month rejected Heathrow’s order to cancel flights to comply with the cap. The airline accused the airport of showing “blatant disregard for consumers” by attempting to force it to “deny seats to tens of thousands of travellers” through the cap.

A Heathrow spokeswoman said at the time it would be “disappointing” if “any airline would want to put profit ahead of a safe and reliable passenger journey.” Virgin Atlantic also criticised the airport’s actions and claimed it was responsible for failures which are contributing to the chaos. Airlines on July 21 were accused of “harmful practices” in their treatment of passengers affected by disruption.

The Competition and Markets Authority and the Civil Aviation Authority issued a joint letter to carriers, expressing concern that “consumers could experience significant harm unless airlines meet their obligations.” The letter stated: “We are concerned that some airlines may not be doing everything they could to avoid engaging in one or more harmful practices.”

These include selling more tickets for flights “than they can reasonably expect to supply” not always “fully satisfying obligations” to offer flights on alternative airlines to passengers affected by cancellations, and failing to give consumers “sufficiently clear and upfront information about their rights.”

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Heathrow orders airlines to stop selling tickets

The measure will lead to more cancellations on top of the thousands of flights axed in recent months…reports Asian Lite News

Heathrow Airport on Tuesday introduced an unprecedented 100,000 limit on daily departing passengers until September and ordered airlines to stop selling summer tickets as airports battle against a staffing crisis, the media reported.

The dramatic move will impose a maximum limit on the number of passengers allowed to leave the airport between July 12 until September 11, the Daily Mail reported.

Airlines had planned to operate flights with a daily capacity averaging 104,000 seats over that period – meaning further cancellations are likely.

Heathrow said it has ordered airlines to ‘stop selling summer tickets to limit the impact on passengers’.

The measure will lead to more cancellations on top of the thousands of flights axed in recent months.

Affected passengers will not be entitled to compensation as the reason for the cancellations will be classified as being outside the control of airlines.

Passengers have been hit by delays and cancellations at airports across the UK due to a shortage of staff after thousands were laid off or left the industry during Covid. Yesterday (Monday), Heathrow cancelled another 61 flights at the last minute – disrupting 10,000 passengers, Daily Mail reported.

And in a fresh sign of chaos, easyJet passengers ‘mutinied’ after being forced to wait for four hours on the Gatwick Airport runway yesterday. The plane never even departed and they had to wait ‘until midnight’ to collect their luggage after being returned to the terminal.

Announcing the passenger cap, Heathrow chief executive John Holland-Kaye said on Tuesday: “Over the past few weeks, as departing passenger numbers have regularly exceeded 100,000 a day, we have started to see periods when service drops to a level that is not acceptable.”

Problems include long queue times, delays for passengers requiring assistance, bags not travelling with passengers or arriving late, low punctuality and last-minute cancellations, Holland-Kaye said.

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