Heathrow closure to cost UK economy up to £4.8m in lost tourism

Independent

21-03-2025

A fire that shut down Heathrow airport due to a major power outage will cost the UK economy millions of pounds - even as flights resume on Friday night.
Some 1,351 flights were either cancelled or forced to land elsewhere, affecting thousands of tourists and many businesses, even beyond the airlines who suffered the first impact on Friday morning.
While putting a precise figure on the impact of such an unexpected occurrence is difficult, the usual flow of inbound passengers to the airport provide scope for at least some guidance of the damage which might be done, as Oxford Economics told The Independent.
'In terms of what's at stake, at the conservative end, we estimate a potential loss of tourism revenue amounting to £4.8 million per day,' economist Stephen Rooney said.
'We can estimate this loss based on typical inbound arrivals volumes that come to the UK through Heathrow and the average daily spend of those travelling.'
Mr Rooney said more than a third of international arrivals to the UK come through Heathrow: 'We can therefore use this figure to size the potential loss of arrivals in volumes terms.'
He said factors such as travellers spending more money while stuck in the UK, and updates about resumed flights, would mitigate the economic effects. However, there are likely to be further costs to the economy outside lost tourism.
'These estimates do not touch on the potential loss of earnings of airport and airline staff, lost income for airport retail and numerous other ancillary services such as airport taxis. Including that, the impact would obviously be more significant,' Mr Rooney said.
Insurance payouts, lost money for affected passengers and other costs to airlines involved would further inflate the damage of the day.
Sree Kochugovindan, senior research economist at global investment company aberdeen, said even if such events are rare and unpredictable, they will still always have an impact on the state of the nation's economy.
The major disruption comes days before Rachel Reeves delivers her Spring Statement during a critical juncture for the UK economy.
'The short-term disruption is immense, with thousands of local homes and business affected. Heathrow is a major hub for passengers and cargo transport, including high value, time sensitive and perishable goods. Near-term impacts for airlines and businesses reliant on cargo are likely significant but temporary,' Ms Kochugovindan said.
He said it was a wake-up call for the importance of reinforcing and modernising critical infrastructure.
'However, a weaker economy and higher gilt yields have eroded the chancellor's fiscal headroom [for public spending] since the August budget [ahead of the] Spring Statement next week,' he said.