The UK aviation sector is experiencing a strong recovery, fuelled by rising passenger demand, major infrastructure investment, and improving financial performance. The industry is pushing ahead with long-term growth strategies and expansion plans, centred around sustainability commitments. Airport transactions returned off the back of this recovery, with deals involving Edinburgh, Aberdeen, Glasgow, Southampton and Heathrow airports last year and the potential for further transactions in 2025.
Passenger travel has surpassed pre-pandemic levels for the stronger performing airports, with the top ten UK airports recording 3% more international journeys than in 2019, with a 4% increase to non-EU destinations. Heathrow Airport saw a record-breaking 6.3 million passengers in January 2025 – up more than 5% from the previous year – highlighting the sector's resilience and growth potential.
To meet growing demand, substantial investment is being made in airport infrastructure. Heathrow's long-debated third runway could boost capacity from 480,000 to around 756,000 flights. Meanwhile, London Stansted's £1.1 billion terminal expansion is set to increase passenger capacity between 43%-70% by 2027. Regional airports, including Leeds Bradford and East Midlands, are also undergoing significant upgrades to enhance operations and improve the passenger experience. In a notable development, Doncaster Sheffield Airport, which closed in 2022, could reopen in 2026. Separately, London City has obtained approval to increase the annual passenger cap at the airport to 9 million by 2031, while expansion at Gatwick and Luton airports are also being considered.
UK airports are reporting impressive financial results. Manchester Airports Group, which operates Manchester, Stansted, and East Midlands airports, reported record EBITDA of £507 million in FY24 – 33% higher than pre-pandemic levels. Airlines are also thriving. EasyJet posted a 34% year-on-year increase in PBT in 2024 and Jet2 is showing strong revenue growth. AviAlliance's £1.53 billion acquisition of AGS Airports in early 2025 suggests that investor confidence is high.
While the industry is on an upward trajectory, environmental concerns remain a pressing issue. For travellers, increased investment should lead to more flight options, improved airport facilities, and potentially lower fares. However, sustainability must keep pace with this growth. Work is underway to make air travel greener, including the Sustainable Aviation Fuel (SAF) Mandate, airspace modernisation, and energy-efficient airport infrastructure. Airlines are investing in fuel-efficient fleets and airports are implementing carbon reduction plans and working towards net-zero goals. But more can be done - expanding domestic SAF production, adopting electric ground support equipment, and strengthening carbon offset programmes will be crucial in making meaningful environmental progress.
As passenger demand continues to rise, airport revenues are recovering, but high operating costs remain an issue, in part due to post-pandemic inflationary pressure. Coupled with other headwinds such as potential increases to business rates liabilities, there is a need to carefully manage the cost base at airports while identifying opportunities to improve revenue streams and leverage opportunities arising from data and intelligence. Some UK airports, particularly those lagging pre-pandemic demand, will need to optimise their route networks to address changes in the passenger mix.
Although there are good reasons for cautious optimism in the UK aviation sector, making sure that airport growth and expansion plans are affordable for consumers, commercially viable, and environmentally responsible is the obvious challenge ahead.
