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Heathrow Airport suffers £1.5 billion loss. Should we be worried?
Adrian Leopard 578

Heathrow Airport suffers £1.5 billion loss. Should we be worried?

The aviation industry is a major contributor to our national economy. We should be watching very carefully

Heathrow Airport is seldom out of the news for long and has certainly been making a lot of noise in the past nine months, although not so much of that noise has been made by aeroplanes.

 

Nonetheless, today we have the announcement that the airport’s losses over the past nine months amount to £1.5 billion – no small sum by any account. Apparently the airport could keep going well into next year even if it had no business as it is very well funded, or at least so we are told.

 

The management tell us that passenger numbers are down by 84% on the previous year and indeed we know because of the many issues raised by airlines that the industry has all but collapsed. How many aeroplanes do you see in the sky now compared with a year ago? How many aeroplanes have now been grounded indefinitely?

 

If matters proceed in terms of virus spread as they appear to be doing today, business could well get worse again before it gets better.

 

Not all is lost, of course. Heathrow is the largest airport in the country and not all of its business is made up of passenger flights. Air freight is a huge part of its business and that has continued in many ways as before. Nevertheless Heathrow employs some 70000 people and its activities spread far and wide in the local economy. It may possibly be seen as something of a barometer of the state of our economy.

 

In fact it is clear from an interview on the BBC with Jon Holland-Kay, the CEO of Heathrow, that the management is very disappointed that they have lost their position as number one airport in Europe to Paris Charles de Gaulle. The reason for this was put down to a different approach to testing in France than to the UK but this is probably not actually the case. Charles de Gaulle has four runways instead of two and is also a most important hub for French regional flights whilst Heathrow is not, virtually all of its business being international. So a direct comparison is not entirely realistic.

 

However the problems a business of such size is having must reflect on our economy and there is no doubt that those in the industry do not see much of a recovery for some considerable time. Whichever way you look at it, it seems likely that there will be significant further redundancies both at Heathrow and its associated businesses, especially with the furlough scheme coming to an end in a few days time.

 

We do not know if the aviation industry will ever be the same again because people are slowly developing new patterns in their lives. Whilst it would be unrealistic to suggest that people will stop going on holiday overseas, until the virus comes to a relative stop and quarantining comes to an end, there is not going to be much chance of a recovery even starting and as things stand, without a fairly reliable worldwide vaccine, an end to this disease is little more than a twinkle in our eyes.

 

One thing must be a certainty now, any short term idea of a third runway at Heathrow must surely be put on ice indefinitely, for so long in fact that if it is ever resurrected, it ought to come forward as a brand new plan and be re-assessed from scratch. So much can change in life that it would be dangerous to take anything for granted. In any case the funds earmarked for this project would no doubt be better spent in getting the country back on its feet.

 

It is also important not to overlook the fact that Heathrow is just one airport in the country. Being the biggest it is likely to suffer a great deal but other airports are also going to feel the pinch so the problems of contraction in the industry are by no means going to be limited to the west of London.

 

One possible glint of light comes with Brexit. If the UK opens up its trade links significantly with the rest of the world, it may be that the use of airports will become more widespread if goods are going to be crossing to the globe to any greater extent. Such a change would help the airport to get back on its feet although it has to be said that freight business is not really quite the same as handling millions of passengers in elaborate terminals. And may be the use of airfreight will take the pressure off terminals like Dover where we are threatened with all sorts of delays.

 

Again, new normal is likely to look very different from what we have become used to.

 

Adrian Leopard 28-10-20

 

Photo Belinda Fewings

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