Heathrow Airport’s revenue from retail concessions rose to £257 million in 2023, up 24.8% on 2022, according to the latest financial results for the year ended 31 December.

It provided the lion’s share of the hub’s total retail revenue for the year, which stood at £698 million (up 23.8% on the £564 achieved in 2022).

Car parking was the next biggest contributor (£170m), followed by ‘other services’ (£124m), catering (£83m) and, finally, ‘other retail’ (£64m).

On top of the mix of retail services attracting shoppers, other factors credited for the overall retail revenue gains include higher departing passengers, car parking revenue, terminal drop off and premium passenger services.

Income per passenger decreased -3.8% to £8.81 (versus £9.16 in 2022), which the airport says is due to people upping their use of public transport post-pandemic and following the opening of the Elizabeth Line.

The wider financial results for the year show that Heathrow is now back in the black following the pandemic, with a ‘small adjusted profit’ recorded for the first time since 2019.

The airport credits a strong Q4 performance in helping it to reach its first adjusted profit in four years, with £38 million adjusted profit before tax.

The balance sheet remains ‘strong’, with gearing below pre-pandemic levels and £3.8 billion of liquidity.

Overall, revenue increased to £3,687 million (compared to £2,913m in 2022) – a 26.6% hike compared to 2022.

However, while airport charges were reduced by 20% in real terms at the start of 2024 in line with the CAA’s H7 settlement, maintaining even a small profit will require the airport to ‘close a £400 million gap with efficiencies and investment trade-offs over the next three years’, said a statement.

“2023 was a good year for Heathrow from a challenging start to a great finish We delivered much improved service for our customers, and managed to turn a small profit after three consecutive years of losses,” commented Heathrow CEO Thomas Woldbye.

“That’s a great platform to build on, although in 2024, we are expected to deliver even further improved service to more passengers, but with airport charges cut by 20% in real terms.

“We will have to pull every lever to become more efficient and make tough choices on where we spend and invest our money to overcome the huge cost challenge set by the CAA and remain profitable over the next three years.”

Heathrow is currently finalising a refreshed business strategy, which will be revealed in the coming months.

No dividends were paid in 2023, and none are currently forecast for 2024, although it is ‘plausible subject to financial performance’, with this being reviewed optionality through the year.

The results come on the back of passenger numbers recovering to 79.2 million in 2023 – the third highest year in Heathrow’s history.

This year, the hub is aiming to welcome a record 81.4 million.

In terms of what to expect in the future, behind-the-scenes investments are currently underway to boost the passenger experience and the airport’s operational resilience.

Among the projects on the radar is upgrading 146 security lanes as part of Heathrow’s £1 billion investment in next generation security equipment.

As reported (see links below), Heathrow has also spearheaded a fresh campaign for the UK government to bring back tax free shopping ahead of the Spring Budget on 6 March, which is the next big chance to action change.

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