Heathrow has warned that the ongoing conflict in the Middle East will drive down both passenger numbers and profits this year, as the airport revised its forecasts sharply lower. Europe’s busiest hub now expects a 1.1% decline in total passengers to 83.6 million – down from its previous estimate of 84.5 million – with a potential further downside risk that could take the figure as low as 80.1 million. At the same time, adjusted profits are forecast to fall by £147 million year-on-year to £1.88 billion, a drop of £60 million compared with the airport’s own December projection.
Middle East conflict hits global demand
The downgrade comes as Heathrow’s latest investor report points to “notable downward pressure” from the war in the Middle East. “The ongoing conflict in the Middle East is putting notable downward pressure on traffic,” the airport said. “This reflects the risk that continued volatility in the Middle East could dampen traffic volumes, with impacts extending beyond the region to global travel demand over the remainder of the year.”
Data from the International Air Transport Association (IATA) underscores the scale of the disruption. IATA recorded a near 60% plunge in demand for travel within the Middle East in March 2026, contributing to a 0.6% drop in global international traffic. That collapse contrasts sharply with strong growth elsewhere – Africa rose 20.6%, Asia Pacific 11.5% and Europe 7.5% – and with IATA’s overall finding that global passenger traffic hit a record high in 2024, climbing 10.4% above 2023 levels and surpassing pre-pandemic figures.
Despite the wider global recovery, Heathrow said that a 0.7% increase in passenger numbers in the year to the end of May – to 32.8 million – was partly driven by passengers using the airport to connect between flights as rival hubs in the region were disrupted. The airport added that it had been “engaging closely” with its regulator, the Civil Aviation Authority (CAA), over the cost of its long-planned expansion.
Third runway: DfT slashes economic benefit estimates
The third runway project, which Heathrow has championed for years, faces a fresh challenge after the Department for Transport (DfT) released a revised economic assessment that dramatically scales down the likely benefits. The government analysis found that the new runway would boost gross domestic product by up to 0.05% – a full 90% less than the 0.5% figure previously claimed. Moreover, the overall trade-off from a bigger airport could set the UK back by as much as £62.5 billion, with the net present value of the scheme estimated to lie between –£23.4 billion and –£62.5 billion.
The DfT’s study – prepared by consultants Aecom – also highlighted severe social and environmental costs. The construction and operation of the third runway could have “major adverse” effects on the health and wellbeing of up to 3 million people living near the airport, the report warned. Those impacts would include worsening noise and air quality, as well as potential harm to access to housing, education, healthcare, open space and transport.
Heathrow has pushed back strongly against the DfT’s numbers, arguing that the analysis is too narrow. “When the benefits of increasing UK trade by £150bn a year and £33bn of private capital to expand Heathrow aren’t captured by this economic assessment, it clearly doesn’t represent the full picture,” a spokesperson said. “The government itself is clear that the model is extremely limited and only designed for publicly funded projects. It doesn’t capture any value from increased trade, inbound tourism or massive private investment into UK supply chains, businesses and steel producers. It’s not fit for purpose and needs to be reformed to capture these clear benefits.”
The DfT has nevertheless launched a public consultation on a revised policy framework for Heathrow expansion, with the government aiming for a final planning decision by 2029. The Labour administration signalled its support for a third runway in January 2025.
Competing proposals and regulatory moves
Amid the controversy, alternative plans have emerged. Billionaire hotel magnate Surinder Arora – a major local landowner – has tabled a phased approach, dubbed “Heathrow West”, that would begin with a new terminal and a shorter runway, with an option to extend later. The proposal, backed by British Airways and Virgin Atlantic, is estimated to cost around £25 billion, avoids diverting the M25 motorway and targets operational status by the government’s 2035 deadline.
The CAA has opened the door to competitive bidding for the expansion, with Arora’s scheme one of four shortlisted options. Heathrow Airport Limited (HAL) had previously been the government’s preferred bidder with a £33 billion plan that includes diverting the M25. In a related move, the CAA has proposed allowing Heathrow to recover up to £320 million in early costs incurred for the third runway project during 2025 and 2026. Airlines have expressed concern that those costs could be passed on to passengers through higher fees, making flying from Heathrow “significantly more” expensive.
The row over the project’s costs has already prompted Heathrow’s new chair to open talks with airlines and Arora in an attempt to defuse a dispute that threatens further delays. The broader aviation sector in the UK has seen record passenger numbers – 302 million in the 12 months to February 2026, exceeding pre-pandemic highs – but Heathrow’s own financial performance has been uneven. The airport returned to profit in 2023, reporting an adjusted pre-tax profit of £38 million, its first since the pandemic. In 2024 it posted a record profit before tax of £917 million despite the CAA imposing a 20% cut in landing charges, though adjusted EBITDA fell 9% compared with the previous year.
“Our expansion plans are widely supported by businesses and trade unions across the UK because they understand the transformative difference this project will make with improved prosperity and new job opportunities for their communities,” the Heathrow spokesperson said.
