Passengers heading through Heathrow Airport this summer may see reduced numbers due to the ongoing US-Iran conflict, which has already pushed up fuel costs and forced airlines to hike air fares. In a report to bondholders, airport operator Heathrow Airport Limited (HAL) forecast a 1.1% decrease in passenger traffic for 2026 compared to last year.
The revised estimate of 80.1 million to 84.5 million passengers represents a significant drop from the previous year's numbers, with a central prediction of 83.6 million. This decrease is attributed to 'notable downward pressure' on anticipated customer traffic due to geopolitical instability in the Middle East.
The aviation sector has been severely impacted by the conflict, particularly since the closure of the Strait of Hormuz, a critical shipping lane for aviation fuel. Fuel prices have more than doubled, prompting some airlines to increase air fares – although major carriers like Ryanair and British Airways owner IAG have managed to mitigate the financial hit through hedging strategies.
In a separate development, Heathrow has renewed its criticism of the Civil Aviation Authority's (CAA) proposed new regulatory framework for the airport. HAL operates as a natural monopoly and is considered the world's most expensive airport, warning that the CAA's efforts to control spending and charges will hinder its ability to improve services. The airport operator has called for targeted adjustments to ensure the final settlement supports improved consumer outcomes.
The CAA published a revised plan for Heathrow's regulation in March, which largely disregarded the airport's demands for higher fees to fund infrastructure upgrades. While Heathrow would remain the world's most expensive major airport under these proposals, the uplift in the 'passenger charge' – the airport's primary revenue stream – was significantly lower than HAL's expectations.