Gatwick Airport has suffered an 18 per cent fall in first-half pre-tax profits after passenger numbers dropped sharply across its two terminals as a result of the Iran war.
The transport hub, located in West Sussex, reported pre-tax profits of £136.5 million for the six months to June 30, down from £166.2 million during the same period last year.
Overall passenger numbers at the airport fell to 19.1 million, representing a 4.7 per cent drop compared to the previous year. The decline was driven by a significant fall in passenger numbers to destinations with a perceived association with the Middle East conflict, including Cyprus, Turkey, Greece and Northern Africa.
Chief executive Pierre-Hugues Schmit said: "Services to the [Middle East] region represent a relatively small part of our business but they were affected at significant levels and are recovering only progressively and overall, this crisis has driven lower passenger numbers."
Long-haul passengers experienced the steepest decline, dropping by 9.2 per cent because of the Iran war, while short-haul passenger numbers fell by 3.9 per cent.
Although the airport started seeing stronger demand over the summer, management noted that more travellers are booking closer to departure because of uncertainty caused by the conflict.
Fuel costs and rising operational expenses
Gatwick has also had to navigate higher jet fuel costs despite its hedging strategy, though it confirmed that it has managed to avoid shortages so far.
Total operating costs at the airport increased by 5 per cent to £318 million in the first half of the year, driven by broader macro-economic factors including wage inflation and higher utility bills.
In an official statement, Gatwick said: "The situation in the Middle East has led us to refocus efforts on managing our cost base while maintaining strong service levels." However, the airport noted that costs were impacted by several macro-economic factors, "including wage inflation and higher utility costs."
Schmit said: "Despite a challenging geopolitical and economic backdrop, London Gatwick has continued to perform well."
Court ruling clears way for second runway
The financial results follow a Court of Appeal ruling at the start of August that paved the way for the expansion of Gatwick's second runway. Gatwick is the second-busiest airport serving London and the south-east of England.
The planned £2.2 billion development will involve moving the airport's existing emergency runway 12 metres north, allowing the site to accommodate approximately 100,000 additional flights each year.
Looking ahead, Schmit expressed optimism regarding the airport's long-term expansion plans.
"We are also excited about our longer-term growth opportunities and with the legal process for the Northern Runway Programme now complete, we can turn our focus from planning to detailed design work and delivery," he added.
