£1bn worth of projects axed at UK airports

On sector of the economy that has been hit particularly hard is the airline industry. As travel restrictions have been imposed along with fear of travelling in confined spaces, has left airlines moth-balling a large proportion of their fleets – with some actually falling into administration.

Further; predictions on travel after the virus has passed, show that there will be a large over-capacity in the industry as fewer people will feel confident in getting into an aeroplane.

This contraction has led to consequences for airports. Heathrow, for example, has closed 3 of its 5 terminals and similar capacity cuts have been initiated at other airports around the country. Research by Construction News has shown that upwards of £1bn worth of projects have been either scrapped or put on indefinite hold. Again, Heathrow’s capital expenditure for 2020 was set at £1.1bn in January, but it has been slashed by £650m.

Gatwick has also stopping all capital expenditure plans for the “foreseeable future”, and Luton airport has withdrawn its request for a development consent order to build a second terminal. This pattern is being repeated across the UK.

This has had a severe impact on the construction industry. On 7th May, Morgan Sindall announced its aviation division had seen a “significant and immediate reduction in all current and future planned activity”. Bentley said this reflected the new reality of the airport market. “There is a whole new ball game here,” he says. “Nobody knows how this will pan out. There is talk of no return to ‘normality’ until 2024/5. What is the point of building a new terminal or extension now, let alone a new runway?”

This is just one example of how a decline in one market can lead to contractors scaling down their businesses forcing job cuts and losing skilled workers. The sector is facing a future of years of contraction, or at best, moribund growth.

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