Heathrow Airport has lowered its passenger and profit forecasts for the year, warning that the ongoing conflict in the Middle East is reducing global travel demand and weighing on the aviation sector.
Europe’s busiest airport now expects to handle around 83.6 million passengers this year, a 1.1% decline from previous projections, citing the impact of the Iran conflict on international travel.
In its latest investor report, Heathrow said: “The ongoing conflict in the Middle East is putting notable downward pressure on traffic.”
The airport added: “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 the weaker outlook, Heathrow reported that passenger numbers rose by 0.7% to 32.8 million during the first five months of the year. The increase was partly driven by more travellers using the airport as a connecting hub while other international airports experienced disruption linked to the regional conflict.
The airport also revised its financial outlook, forecasting adjusted profits of £1.88 billion this year, down from £2.03 billion last year and around £60 million below its previous estimate published in December.
Alongside the weaker traffic forecast, Heathrow confirmed it is continuing discussions with the UK’s Civil Aviation Authority over the costs of its proposed third runway expansion.
The update comes after the Department for Transport published new analysis suggesting the economic benefits of a third runway may be far lower than previously estimated. The report indicated the project could increase UK GDP by up to just 0.05%, significantly below earlier projections, while warning of wider economic costs.
Heathrow rejected that assessment, arguing the Government’s analysis failed to account for the wider economic benefits generated by increased trade, tourism and private investment.
A Heathrow 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 spokesperson added: “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.”
The expansion plans also continue to face environmental scrutiny. A separate Government-commissioned assessment concluded that constructing and operating a third runway could have “major adverse” effects on the health and wellbeing of up to three million people living near the airport, with concerns over increased noise, air pollution and pressure on local infrastructure.
Heathrow, however, insists the project remains vital for the UK economy.
“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,” the spokesperson said.