Selling Stansted airport and hitting airlines with higher take-off and landing charges helped Heathrow Airport swing into profit in the first half of the year.
The world’s busiest international airport sold Stansted in February for £1.5 billion, under the orders of the Competition Commission. But even stripping out the impact of the sale, Heathrow managed to turn last year’s £70 million loss into a £44 million pre-tax profit for the six months to end of June.
Revenues at the airport operator formerly known as BAA rose 9.2% to £1.15 billion, mainly thanks to income from airline tariffs jumping 15.7 per cent in the six months.
Heathrow’s two runways already operate at full capacity but the airport can squeeze in more passengers as airlines fly fuller, larger planes, and it did: passenger traffic rose 2.4 per cent in the six months, to 34.4 million. Most of the growth was driven by European traffic, which rose 4.9 per cent to 14.3 million passengers. British Airways’ acquisition of bmi saw it axe some of the carrier’s routes to Africa, which hit flier numbers to the continent, but traffic to the Middle East, North America, Latin America and Asia Pacific all rose.
Chief executive Colin Matthews, pictured, said: “we want to continue that progress over the next five years, which is why we’ve submitted fresh plans to the Civil Aviation Authority for a further £3 billion of investment.” Those plans have faced controversy from airlines, however. As the CAA determines levies for the next five years, Heathrow wants aeronautical charges to rise by inflation plus 4.6 per cent each year between April 2014 and 2019.
That’s lower than the 5.9 per cent the airport put forward in February, but carriers including British Airways and Virgin Atlantic say it is too high. Heathrow has some of the highest aeronautical charges in the world; this year the CAA suggested they were cut in real terms.
But Matthews said: “Of course airlines want the lowest possible charges, and as part of their duty to shareholders we expect them to argue as much as they can. But we are a company, we need debt and equity from international sources and they have choices. If the rate of return is below market rate, they will go elsewhere.”