Heathrow expansion plea as full signs go up

Britain’s busiest airport carried 70m passengers in 2012, up slightly on 69.4m a year earlier and its second successive record passenger total. This was largely driven by an increase in long-haul passengers.

Heathrow expects annual passenger numbers to rise to 72.6m by 2019.

Heathrow, which is controlled by Spanish infrastructure group Ferrovial, argues its ‘hub’ model helps support the UK economy, but says expansion is vital if it is to close ground on global rivals.

British Airways revived services between Leeds Bradford Airport and Heathrow in December, after a gap of more than 30 years.

“The hub airport model used by Heathrow and its competitors uses transfer passengers to support flights to long haul destinations which would not be viable using local demand alone,” said Heathrow.

“But unlike its rivals in France, Germany, the Netherlands and Dubai, Heathrow is full and its capacity constraints prevent any meaningful increase in the numbers of flights and routes.

“This means the country’s ability to trade with emerging economies is constrained, with potential long-term consequences for UK trade, jobs and economic growth.”

The airport’s chief executive, Colin Matthews, called for an urgent decision on where and how to expand the UK’s airport capacity to prevent Britain falling behind competing hubs in Europe and the Middle East.

Mr Matthews said: “In terms of timing, we’d like the decision quicker ... we think it’s urgent.”

Heathrow is calling for a controversial third runway at the site west of London.

A commission, chaired by Sir Howard Davies, was set up late last year to examine ways to expand UK airport capacity but is not due to report fully until after the general election in 2015.

Options being considered include building a third runway at Heathrow, a new four-runway hub in the Thames estuary to the east or expansion of the capital’s secondary airports at Gatwick to the south of the capital or Stansted to the north east.

“For the decision, whatever it is, to stick it will need broad support so if it’s just one political party or one narrow section of opinion formers then the decision that is taken will probably be untaken a few months later as it was before,” said Mr Matthews.

“However, getting that broad agreement may take time.”

The company last year changed its name from BAA after it was forced by the Competition Commission to sell Stansted airport. However, the 2012 results include earnings at Stansted, as the deal is due to complete later this month.

Heathrow Ltd grew revenues 8.1 per cent to £2.46bn and on an underlying basis it returned to the black with pre-tax profits of £46.4m versus losses of £166.7m a year earlier.

On a statutory basis the group narrowed its pre-tax losses to £32.8m.

Manchester Airports Group is buying Stansted, Britain’s fourth-busiest airport, for £1.5bn. About 17.5m passengers and 131,400 flights pass through Stansted every year.

Passenger traffic at Heathrow was driven by record load factors – a measure of how full planes are. These increased to 75.6 per cent from 75.2 per cent in 2011.

Heathrow said there is “negligible” opportunity to increase flight numbers. These dipped about one per cent to 471,341 from 476,197 but remain close to its limit of 480,000 flights annually.

Mr Matthews said: “2012 was an historic year for Heathrow. We gave a warm welcome and a smooth journey to thousands of Olympic and Paralympic athletes, and greeted a record 70m passengers over the twelve months. We also achieved record customer satisfaction levels, with three quarters of people saying they had a ‘very good’ or ‘excellent’ experience at Heathrow.

“Our capital investment programme continued, with over a billion pounds spent on improving the airport, mainly on the new Terminal 2 which opens next year. We also completed our refinancing programme, successfully issuing another £3bn of bonds to put us on a stable, long-term financial footing.”

The Games knocked Heathrow’s traffic in July and August by 400,000 passengers, which it said reflected Britons staying at home and foreigners choosing to avoid the UK, concerned at disruption from the Games. The airport’s passenger growth was led by North Atlantic traffic which increased 3.2 per cent to 16.3m passengers.

However, strength in services with Brazil, the Middle East and the Far East was offset by weakness in African and Indian journeys as airlines cut or reduced services.

Domestic traffic at Heathrow increased by 0.5 per cent to 4.7m.

Stansted’s passenger numbers declined 3.2 per cent to 17.5m last year.

The company predicted more strong growth in Heathrow’s turnover this year and said construction of the new Terminal 2 should be completed towards the end of 2013, with operations commencing in mid-2014.

The project accounted for a large slice of the £1.1bn invested in the airport during 2012, an increase of more than 30 per cent on a year earlier.

Heathrow’s retail income increased 4.4 per cent to £6.21 per passenger, while the figure was 2.8 per cent higher at £4.27 for Stansted.

Travellers face rise in prices

A £3BN five-year investment plan by Heathrow airport could see passengers facing a rise in ticket prices.

Heathrow Ltd said it wants Britain’s Civil Aviation Authority (CAA) to allow it to increase charges for airlines to use the airport between 2014 and 2019.

If approved, the charges would increase from the equivalent of £19.33 per passenger for 2012/13 to an upper limit of £27.30 in 2018/19.

The charges will help fund the opening of the airport’s new Terminal 2 next year, improved check-in and baggage facilities and the construction of new taxiways and stands to allow Heathrow to accommodate more modern aircraft.

The CAA will publish its final decision on Heathrow’s proposals in January 2014.