Heathrow says travel surge is a ‘bubble’ that will burst

Heathrow, the UK’s busiest airport, has predicted that this year’s surge in demand for air travel is a “bubble” that is unlikely to last past this summer and has forecast another year of losses. The owner of London’s main airport raised its passenger forecasts for this year from 45.5mn to 52.8mn, about 65 per cent of pre-pandemic levels. But it put the rise in passenger numbers down to a “temporary increase in demand” driven by holidaymakers “taking advantage” of relaxed international travel rules. “That is not normal demand, that is a bubble that will work through at some point and will settle down,” said CE John Holland-Kaye. Heathrow predicted the rush of bookings would last all summer, but then could be followed by a “winter freeze”. It said some airlines had cancelled autumn flights because of factors such as higher fuel costs and pressures on the wider economy. Holland-Kaye said there was “a huge amount of uncertainty” over the outlook after the summer and that the airport’s passenger forecasts were based on a “middle ground” of stronger demand lasting until September before tailing off. Heathrow reported a pre-tax loss of GBP191mn in the first three months of the year, compared with a GBP307mn loss a year previously, taking its overall losses since the start of 2020 to GBP4b. Revenue more than tripled to GBP516m in the first three months of the year as passengers flooded back, but the airport does not forecast a return to profit or dividends this year. Heathrow has clashed with airlines after it asked UK regulators for permission to increase the landing fees it charges to help its finances recover from the pandemic. Story has more.<br/>