Why Heathrow Shutdown Mauls Global Travel Industry, Airlines Face Compensation Tsunami, New Report Shows Much More

Published on March 21, 2025

By: Tuhin Sarkar

In a major blow to global travel, Heathrow Airport’s sudden closure has caused massive disruptions, with over 1300 flight cancellations affecting thousands of passengers. The emergency shutdown, which has sent shockwaves through the aviation industry, is expected to have a ripple effect on airports across the United Kingdom and beyond. As of today, travelers are facing a wave of flight cancellations, delays, and potential claims for compensation, with airlines under immense pressure to manage the crisis and provide necessary services.

The unprecedented situation, brought on by a fire incident, is likely to lead to a surge in compensation claims from affected passengers, although legal experts warn that the airline industry may be protected from such payments due to the fire being categorized as an extraordinary event under UK law.

This report delves into the impacts of Heathrow’s closure on global travel, examining the immediate consequences, the financial implications for airlines, and the regulatory frameworks that govern passenger rights in times of such disruption.

“It is another day of travel chaos with the closure of Heathrow and over 1300 flight cancellations. Passengers impacted by the shutdown are unlikely to be eligible for compensation payments if their flight is delayed or cancelled, as the fire will almost certainly be considered an extraordinary event. 

“We remain on high support alert with all our clients, as under UK regulations, airlines still have a duty of care towards passengers who experience significant disruptions, and must provide them with assistance – including the provision of food and drink and accommodation for overnight delays. Many other UK airports are likely to have increased traffic as travel to and from Heathrow spills over.

“Affected airlines will be under pressure to not only reschedule flights, but ensure they are meeting both their passengers’ needs and their regulatory requirements. As payment partner to many airlines, including the UK’s largest operator out of Heathrow, we anticipate a large amount of payments for passengers over the coming days. When last year’s global IT outage grounded thousands of flights, we saw a 200% rise in payments to passengers from airlines on the first day alone. “, says Tara Spielhagen, CEO of Swiipr to Travel And Tour World.

The Immediate Impact: A Chaotic Day for Travelers
Passengers traveling to and from Heathrow faced a nightmare scenario as the airport’s closure caused more than 1300 flight cancellations. The chaos began early in the morning, with travelers arriving to find their flights grounded, leaving them scrambling for alternative routes or accommodations. The closure was necessitated by a fire on airport grounds, which grounded operations and disrupted air traffic control systems.

As one of the busiest airports in the world, Heathrow’s closure has had a significant ripple effect on travel not only within the UK but globally. Flights bound for major destinations such as New York, Dubai, and Paris were affected, and neighboring airports have already seen an uptick in traffic as passengers are rerouted.

Many airports in the UK, already facing high levels of air traffic congestion, are preparing for the consequences of the Heathrow closure. There is a distinct possibility that other UK airports, including Gatwick and London City Airport, will experience major delays as Heathrow-bound traffic spills over, further amplifying the chaos.

Airline Pressure to Reschedule Flights
The immediate task for affected airlines is not only to reschedule the thousands of canceled flights but also to meet the regulatory requirements set by UK law for providing passenger assistance. According to these regulations, airlines must ensure that passengers receive proper care, including food, drink, and accommodation when delays occur due to extraordinary events like fire disruptions.

As the situation unfolds, many airlines will be working around the clock to find solutions for their customers. But while rescheduling flights is a priority, the pressure to handle passenger claims for compensation looms large. Travel experts predict a surge in compensation claims as passengers seek reimbursement for the disruptions to their plans.

In 2022, during a global IT outage that grounded thousands of flights, the airline industry saw a 200% increase in compensation payouts, with the first day alone registering a massive rise in payment claims. The effects of the Heathrow shutdown are expected to follow a similar pattern, with a large number of payments anticipated in the coming days.

Extraordinary Event Clause and Its Implications
Under UK aviation regulations, flights that are disrupted due to what are deemed “extraordinary events” are typically exempt from compensation requirements. The fire at Heathrow falls into this category, which means airlines may not be required to compensate passengers for delays or cancellations caused by the event.

However, while passengers may not receive financial compensation for their disrupted travel, they are still entitled to basic care and support. This includes meal vouchers, accommodation, and transportation, especially in the case of overnight delays. Airlines are expected to adhere to these provisions, ensuring passengers’ comfort and safety during the disruption.

This clause has sparked debates within the aviation industry, as many feel that passengers’ rights should extend beyond basic assistance during such extraordinary events. Nonetheless, it is clear that the extraordinary event clause will play a pivotal role in determining the financial obligations of airlines.

The Role of Payment Partners in Crisis Management
As payment partners to a number of major airlines, financial service providers are preparing for a significant increase in claims for reimbursement over the coming days. Airlines are under intense pressure to meet their passengers’ needs, but also to comply with the regulatory framework set by the UK’s Civil Aviation Authority.

Payment partners have played a crucial role in managing financial transactions for airlines during past disruptions. Last year, when a global IT outage grounded thousands of flights, payment providers saw a massive 200% increase in payments to passengers on the first day of the crisis alone. This surge in claims is expected to continue over the coming days as affected passengers demand reimbursement.

For many airlines, the assistance of payment partners is crucial to maintaining efficient operations during a crisis. These partners ensure that airlines meet regulatory requirements and provide timely payments to passengers, helping restore customer trust after a major disruption.

Looking Ahead: The Long-Term Impact on the Airline Industry
While the immediate focus is on managing the disruption and rescheduling flights, the long-term effects of this crisis may reverberate throughout the airline industry. The increased pressure on airlines to meet their obligations to passengers, combined with the financial strain of compensation claims, may force many carriers to reassess their crisis management strategies.

The growing trend of travel disruptions is also likely to prompt further scrutiny of the extraordinary event clause in UK aviation law. If passengers continue to face significant delays due to factors outside the airlines’ control, there may be calls for stronger regulatory oversight to ensure that the rights of travelers are upheld in all circumstances.

In the wake of this crisis, airlines may also begin to invest more heavily in technological solutions that can help mitigate the effects of such disruptions in the future. For example, improvements in IT infrastructure, better communication systems for passengers, and enhanced operational capabilities could all help reduce the likelihood of such widespread chaos in the future.

Conclusion
The closure of Heathrow has resulted in one of the most significant travel disruptions in recent memory. With over 1300 flight cancellations, passengers are understandably frustrated, and the pressure on airlines to handle the crisis is immense. Despite the extraordinary event clause potentially shielding airlines from compensation claims, passengers are still entitled to essential care, and the financial implications of this event are likely to be felt for some time.

As the industry grapples with the fallout, the importance of regulatory compliance and efficient crisis management cannot be overstated. Payment partners, along with airlines, will continue to play a vital role in ensuring that passengers’ needs are met and that the financial impact of such disruptions is managed as effectively as possible.

The Heathrow shutdown is a stark reminder of the challenges facing the aviation industry, and it may spark long-term changes in how disruptions are managed and how passenger rights are safeguarded in times of crisis.