Heathrow boss: Business travel yet to rebound

GUY TAYLOR

THE AVIATION sector should not bank on soaring demand continuing, the boss of Heathrow airport has warned, amid concerns in the sector that airlines could struggle post-summer without a sustained recovery in corporate travel.

“We all want to make the most of the demand while it’s here but we can’t bank on it continuing,” long-time chief John Holland-Kaye told City A.M. While leisure travel bookings have soared ahead of expectations, business demand has recovered much more slowly, which could create issues when the busiest months –traditionally May to October –come to an end.

“What we’re seeing at the moment is leisure demand is ahead of where it was in 2019, business demand is behind where it was in 2019,” Holland-Kaye explained.

“Business was about 34 per cent of our demand in 2019, it’s now down. So it is coming back much more slowly, which is sort of what we would have expected. The surprise is that leisure demand is defying gravity, and... we all think it’s only a question of time before that starts to slow down,” he said.

Aviation has seen an unprecedented boom over the last few months due to pent-up holiday demand post-pandemic, despite ongoing cost of living concerns and a difficult macroeconomic backdrop.

Both Easyjet and the British Airways owner IAG reported record profits for their last quarters in July, with IAG netting a colossal €1.25bn (£1.07bn). Ryanair, though slightly more tempered, still flew past pre-pandemic levels on the back of strong demand.

John Grant, senior analyst at aviation analytics firm OAG, said “the great unknown... is corporate recovery, which has been much slower than anticipated”.

“Airlines [are] noting this issue as a factor in their year-end guidance”, Cirium analyst Rob Morris also noted slowing recovery in the sector as high fares in corporate travel drive companies to rein in budgets for business trips.