Smaller airports in Europe are facing a significant threat, as warned by the head of the Airports Council of Europe. Olivier Jankovec, the director general of ACI Europe, expressed concerns that certain small airports on the continent could struggle to survive due to potential jet fuel shortages resulting from the recent Middle East crisis.
With the closure of the Strait of Hormuz during the Iran War, jet fuel prices have surged, leading many airlines to cancel flights. Regional airports are particularly vulnerable to airlines reducing capacity and increasing fares, as the demand on their routes tends to be more sensitive to price changes compared to larger airports. This challenge comes after the impact of the coronavirus pandemic, which has left some regional airports operating at levels 30% lower than in 2019, according to Jankovec.
Jankovec emphasized that the current high jet fuel prices and the looming cost-of-living crisis pose a dual threat to many regional airports across Europe. He described the situation as an existential threat for these airports in the face of potential supply and demand shocks.
Conversely, major airports in Europe, like Heathrow, are facing a different issue. The UK’s busiest airport recently raised concerns about its capacity due to increased demand for connecting flights amid the ongoing Middle East conflict. Heathrow’s chief financial officer, Sally Ding, stated that the airport is currently operating at full capacity.
The airport saw a 3.7% year-on-year increase in passenger traffic in the first quarter, with 18.9 million passengers passing through. The conflict in Iran resulted in airspace closures, leading to a rise in transfer passengers at Heathrow. This trend is expected to continue as geopolitical uncertainties persist, affecting one of Heathrow’s key international competitors, Dubai.
While Heathrow managed to absorb demand from other sources temporarily, the airport anticipates that passenger numbers for the remainder of the year will be affected by the ongoing uncertainty in the Middle East. This situation could lead to fewer choices and higher fares for passengers, impacting the UK economy negatively.
Heathrow has proposed a £50 billion plan to expand its capacity, including the construction of a new 3.5-kilometer runway. The project aims to increase passenger capacity to 150 million annually and accommodate 756,000 flights per year. The airport has emphasized that its plan is privately financed, carefully evaluated, and focused on delivering value, expressing readiness to invest and grow with the right regulatory support and government policies in place.
The expansion project involves redesigning a section of the M25, London’s ring road, by diverting it underground. While competing proposals have been considered, including a more cost-effective option by the Arora Group, the government has selected Heathrow’s proposal despite facing delays in implementation. The government is expected to reassess its overall strategy in its Airports National Policy Statement in the coming summer.
