UK. London Heathrow Airport retail revenue increased by +23.8% to £698 million (US$881 million) in 2023, with the rise attributed to higher numbers of departing passengers, car parking revenue, terminal drop-off income, premium passenger services and the mix of retail services available.
The growth figure was lower than the +29% leap in passenger traffic for the year, with volumes reaching 79.2 million, the third highest in Heathrow history.
Within the retail division, retail concession income climbed by +24.8% to £257 million (US$325 million), with catering (food & beverage) income up +40.7% to £83 million (US$105 million).
Retail income per passenger decreased -3.8% to £8.81 (US$11.13) year-on-year, which the airport company said was down to increased use of public transport post-pandemic and following the opening of the Elizabeth Line connecting Heathrow to the city of London. Retail income encompasses retail, F&B, car parking and other services.
Group revenue increased by +26.6% to £3,687 million (US$4,657 million). Adjusted EBITDA rose by +32.3% to £2,228 million (US$2,814 million) while the company returned to adjusted pre-tax profit of £38 million (US$48 million) after three years of losses (£684 million in 2022).
The company noted that the Civil Aviation Authority has reduced airport charges by -20% from 2024, meaning that “even a small profit will require us to close a £400 million gap with efficiencies and investment trade-offs over the next three years”. An updated business strategy to manage this gap is being finalised.
Heathrow Airport also again urged the government to “stand up for Britain” with the Spring Budget due on 6 March.
“UK consumers will pay more to travel in the future if Ministers do not speed up the delivery of a domestic Sustainable Aviation Fuel industry, and the Chancellor makes the UK a magnet for international tourism spend by levelling the playing field with the UK’s European rivals and bringing back tax free shopping. The Spring Budget should not miss the chance to deliver change on both of these key issues for the economy.”
Heathrow CEO Thomas Woldbye said: “2023 was a good year for Heathrow from a challenging start to a great finish. We delivered much improved service for our customers, and managed to turn a small profit after three consecutive years of losses. That’s a great platform to build on, although in 2024, we are expected to deliver even further improved service to more passengers, but with airport charges cut by -20% in real terms.
“We will have to pull every lever to become more efficient and make tough choices on where we spend and invest our money to overcome the huge cost challenge set by the CAA and remain profitable over the next three years.” ✈
In a video interview with The Moodie Davitt Report recently, Heathrow Retail Director Fraser Brown spoke about 2023 performance and expectations for 2024. Click here for the full story or click on the video above to view.
