Heathrow hit by 600,000 Omicron cancellations in December – business live

Omicron hit Heathrow just a few weeks after the US lifted its travel ban, which was marked by a simultaneous double take-off by British Airways and Virgin Atlantic.

Despite the latest variant, Heathrow saw nearly 800,000 North America passengers in December – a 540% increase from 2020.

But that’s barely half as many as in December 2019, when over 1.5m North America passengers passed through Heathrow’s terminals.

Heathrow CEO John Holland-Kaye argues that the sector will only “fully recover” once the risk of Covid-19 restrictions has lifted for good.

Holland-Kaye says:

“There are currently travel restrictions, such as testing, on all Heathrow routes – the aviation industry will only fully recover when these are all lifted and there is no risk that they will be reimposed at short notice, a situation which is likely to be years away.

While this creates enormous uncertainty for the CAA in setting a new 5-year regulatory settlement, it means the regulator must focus on an outcome that improves service, incentivises growth and maintains affordable private financing.”

The Civil Aviation Authority proposed last October that Heathrow could increase charges by up to 56% by 2023 as it seeks to recoup losses from the pandemic. That’s less than Heathrow hoped, but much more than airlines argue is fair as they try to recover from Covid-19.

Related: Heathrow passenger charges could rise by up to 56% by 2023

Related: Petulant Heathrow should stop whining about £2.6bn Covid costs

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Heathrow Airport has warned that the aviation sector faces a “long-haul recovery”, after the omicron variant sparked a rush of cancelled flights last month.

The UK’s largest airport has revealed that at least 600,000 Heathrow passengers cancelled travel plans in December, after the discovery of the Omicron variant led to travel restrictions to be imposed.

For 2021 as a whole, Heathrow says it only saw 19.4 million passengers – less than one quarter of 2019, before the pandemic, and around 12% less than in 2020 (when it handled 22.1m passengers).

© Provided by The Guardian
Heathrow travel statistics for December Photograph: Heathrow

And the outlook looks uncertain, Heathrow warns, as it urges ministers to drop Covid-19 testing for fully vaccinated passengers to encourage travel.

It says:

• There is significant doubt over the speed at which demand will recover. IATA forecasts suggest passenger numbers will not reach pre-pandemic levels until 2025, provided travel restrictions are removed at both ends of a route and passengers have confidence they will not return rapidly
• We are urging the UK government to remove all testing now for fully vaccinated passengers and to adopt a playbook for any future Variants of Concern that is more predictable, limits additional measures only to passengers from high-risk destinations and allows quarantine at home instead of in a hotel

Also coming up today

European markets are set to open higher, after worries about possible US interest rate rises hit stocks on Monday.

Wall Street managed a late recovery last night, after the Nasdaq Composite index dipped into correction territory (10% off its record high), ahead of Wednesday’s US inflation report.

Asia-Pacific stocks have dropped today though, with Australia’s S&P/ASX down 0.8%.

Kyle Rodda of IG explains:

Stocks have remained on the backfoot today, with sentiment across the ASX200 particularly weak.

Global pressures stemming from heightened volatility on Wall Street and fears about tighter global monetary policy are probably behind some of that, as is a market discounting marginally weaker profits from what’s shaping as a fairly material hit to the Australian economy from the current COVID-19 outbreak.

Investors will be keen to hear from Federal Reserve chair Jerome Powell today, when he appears before the Senate banking committee for a confirmation hearing.

Powell, who has been nominated for a second term, will be questioned about the Fed’s plan to control rising prices, and its recent hawkish twist.

In testimony released overnight, Powell says the central bank is prepared to take action to ensure elevated inflation does not become entrenched, while also pointing out that the post-pandemic economy may look different than before.

The agenda

• 9.30am GMT: World Economic Forum publishes Global Risks Report 2022.
• 9.30am GMT: UK labour productivity statistics for Q3 2021
• 11am GMT: NFIB index of US business optimism
• 3pm GMT: US Federal Reserve chair Jerome Powell’s confirmation hearing at the Senate banking committee