The closure of Heathrow Airport could cost millions of pounds, with travellers and goods grounded as Europe’s largest airport spent the vast majority of Friday without power.
As well as airlines being impacted by diversions and associated compensation, the UK economy will be affected by the absence of cargo, tourists and business travellers landing for a day.
In the early hours of Friday morning Heathrow announced it would be closed for the rest of the day with no flights landing or taking off due to a «significant» power outage caused by a fire at an electricity substation. The cause of the fire is not yet known.
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Every year Heathrow handles nearly £200bn worth of cargo which breaks down to goods priced at £543m travelling through every day, according to the airport.
Top exports from the airport are salmon, books and medicine, while items most commonly imported through the hub are vegetables, flowers and compounds found in medicine, plastics and perfume.
Nearly half (48%) of all UK air cargo was processed through Heathrow in 2023, meaning around 0.13% of the UK’s annual cargo was due to be handled today.
The broader economy cost
Researchers at the Centre for Economics and Business Research (CEBR) calculated the economic impacts of the airport and estimated in 2021 the value of trade it contributed would reach £204bn by 2025.
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It would contribute £4.7bn to the economy, it forecast, meaning a daily contribution of £12.88m, a figure that could be lost by the airport’s shutdown.
The financial loss could be in the region of hundreds of millions of pounds, according to the founder of Endau Analytics, an aviation industry advisory firm.
A hit to airlines
Airlines and suppliers alone could have costs of «at least» £20m for a day of halted operations, according to travel expert Paul Charles, a former Virgin Atlantic communications director and chief executive of travel consultancy The PC Agency.
The figure is so high as it includes an estimate of expenses for passengers, crew accommodation, additional transport, fuel and other costs for the aircraft themselves.
Analysts at investment bank Jefferies said compensation for delays could knock 1% to 3% off profits at BA and Aer Lingus parent company IAG.
However, the head of the Spanish airlines association Javier Gandara said the outage was likely considered a force majeure event, meaning passengers would not be entitled to compensation.
In a force majeure situation, airlines have to assist passengers by providing accommodation and meals but don’t have to pay compensation.
Aside from the costs of dealing with the closure the company values have dropped as share prices fell.
IAG, which also owns airlines Vueling and Iberia, saw its share price fall 2.34% as of 3pm on Friday, wiping £326m off the company value.
Similarly, EasyJet shed £33.5m with a 0.9% stock fall and Wizz Air lost £38.37m after a £2.18% drop in share price.