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Any signs of a recovery following the impact of the economic crisis on the airline industry are wiped out now that the Eyjafjallajökull volcano in Iceland has brought Europe’s most important airports and air traffic to a standstill.

More than 7 million passengers are stranded worldwide due to the eruption of the volcano and its ash (a mixture of glass, sand and rock particles) which is considered a particular threat to aircraft engines causing them to stall. The ash crisis now in its 5th day has lead to thousands of flight cancellations and the closure of European airspace.

The airspace of more than 20 countries remains closed, or partially closed. Among the countries affected are Belgium, parts of Croatia, Czech Republic, Denmark, Estonia, Finland, parts of France, Germany, Hungary, Ireland, Northern Italy, Netherlands, Norway, Poland, Romania, Serbia, Slovenia, Slovakia, Sweden, Switzerland, Ukraine and the UK.

The level of disruption following the blanket closure of European space is unprecedented. Even after the impact of the 9/11 terrorist attacks in 2001, European airspace was not closed for such a long period, illustrating the severity of the crisis.

According to IATA, the financial ramifications on the airline industry is estimated to be US$200 million per day in lost revenues, along with additional costs for redirecting travellers and aircraft, lost ancillary revenues, provision of assistance at airports such as the supply of meals and refreshments, along with accommodation if an overnight stay is required for customers.

Eurocontrol (European Organisation for the Safety of Air Navigation) estimates that more than 63,000 flights will be cancelled between 15 April 2010 and 19 April 2010 however this number is set to increase if the ban on the European airspace is prolonged. Experts are warning that volcanic eruptions could continue for weeks ahead with flight cancellations worsening as the volcanic ash cloud spreads in Europe which will prolong the travel uncertainty and chaos.

Euromonitor International’s Research Manager, Camilla Butler, stranded in Berlin due to the travel chaos commented: “Even if they open UK airspace, we still need to wait before Germany will open its. There are no options on the train or ferry until Saturday (24 April), and even the coaches are fully booked till Saturday.”

NATS (National Air Traffic Services) reported for the UK that air restrictions would remain in place until 7am BST on 20 April, with Scottish air space opening after that time as the situation had improved. With Scottish airports back up and running, transatlantic flights such as from the US will be able to resume, aiding the rescue operation for passengers stranded in the Americas such as Euromonitor’s Head of Global Food Research, Lee Linthicum and family.

Lee commented “there are far worse places to be marooned.. and I plan  to take the second half of the week off to do fun stuff.” Depending on the latest news from the Met office, airspace for England and Wales may be fit for flying later in the same day.

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Airlines questioning the ban

Leading European carriers such as Air France-KLM and Lufthansa are increasing the pressure on supranational institutions such as the EU and the ICAO to restore normal activity following their test flights over the volcanic ash which left aircraft and engines undamaged.

ACI EUROPE (Airports Council International in Europe) and the Association of European Airlines in a joint statement pointed out that “the eruption of the Icelandic volcano is not an unprecedented event and the procedures applied in other parts of the world for volcanic eruptions do not appear to require the kind of restrictions that are presently being imposed in Europe.”

Calls were also made for financial support by the EU to the airline industry amid the volcanic crisis as many airlines will be severely affected by the flight cancellations and airspace ban, with bankruptcies being touted for as early as next week.

Considering that IATA forecast that prior to the volcanic eruption, the airline industry would witness a loss of US$2.8 billion in 2010, the body will no doubt be revising its forecasts downwards. Depending on the duration of the crisis, loss in revenues could exceed those recorded in 2009 – the industry’s annus horribilis – amounting to US$9.4 billion, of which European airlines such as BA and Air France KLM accounted for a fair share.

Wider economic impact

Closing the airspace cuts the vital supply for the European economy and its global distribution links as airlines globally cancel their European flights. In addition, analysts from RBS predict that the European economy will suffer a loss of US$500 million a day because of employees being absent from work, with many schools and hospitals being paralysed due to the environmental havoc, for example, in the UK, Sweden and Finland due to people being stranded.

Supplies of imported flowers such as from Kenya and exotic fruit and vegetables along with pharmaceutical companies with high value and low weight products and post office services are among those which heavily rely on the air freight and are now struggling to keep their businesses alive.

Searching for travel alternatives

Ferry, railway, and bus operators along with car rental players have recorded a strong increase in bookings due to the volcanic cloud. Companies such as P&O are registering a surge of customers in one day from 100 to nearly 6,000 foot passengers across the Channel, while Eurostar is seeing an increase of 50,000 more passengers from the moment the European airspace closed.

In an effort to facilitate the return of stranded passengers, the HM Maritime and Coastguard Agency in the UK permitted exemptions to all ferries travelling from Dover to Calais to carry 10% more passengers. Also, three Royal Navy ships will be allocated by the government in the UK to bring stranded travellers predominantly located in France.

Environmental issues brought to the fore

The potential environmental hazards that climate change brings such as – melting ice, rising sea levels, heavy storms, earthquakes and erupting volcanoes are evidence of how vulnerable societies are to the impacts of nature. Concerns exist, based on historical evidence, that the volcanic activity of Eyjafjallajokull will trigger the eruption of Katla – a bigger volcano nearby.

Thus, it is believed that if such volcanic activity intensifies the ash levels in the atmosphere could lead to a global cooling bringing some of the longest and coldest winters in record, but equally much more travel havoc.

In addition, latest information also confirms that the Shiveluch volcano in Eastern Kamchatka region in Russia has erupted volcanic ash to the height of 7.5 kilometres above the sea level – signs that global warming is affecting all.

The exact economic repercussions following the eruption of the Icelandic volcano and the closing of the European airspace remain to be seen, however passengers must expect that even if the European airspace is reopened, the backlog of flights will require a long period to return to normality

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