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Volcano ash cloud hits airline, shipping, travel industries

From restaurants needing fish to air freight carriers switching to trucks, Iceland's volcano halts Europe.

An aerial shot of the ash cloud rising 6,700 meters at the Eyjafjallajokull glacier in southern Iceland, April 14, 2010. The plume of smoke continues to delay air travel across Europe, likely through Saturday. (Icelandic Coast Guard/Arni Saeberg/Handout/Reuters)

BRUSSELS, Belgium — Bumping into friends in the neighborhood around the European Union’s headquarters on Friday morning was enough to illustrate the extent of the disruption caused by the volcanic cloud drifting over Europe.

There was the United Nations negotiator forced to cancel a trip to Sudan; then the Estonian woman whose diplomat husband was stranded in Moscow; a business writer unable to cover key EU finance talks in Madrid; an EU official seeking overland alternatives to a planned flight home to France for the weekend.

With northern Europe transformed into a no-fly zone by the eruption of Iceland's Eyjafjallajokull volcano, airlines were expected to loose over $200 million a day in revenue, said a “conservative estimate” from the International Air Transport Association.

About 8,000 flights in Europe were canceled on Thursday and about 16,000 were expected to be grounded Friday — well over half the number normally criss-crossing the continent.

Ireland, Britain, Norway, Denmark, Sweden, Belgium, the Netherlands, Finland and Estonia completely closed their airspace for all civilian flights. Northern France and Germany were shut down, including Paris, Frankfurt and Berlin airports.

Eurocontrol, the body that coordinates flights in Europe, called the disruption “unheard of in the history of European aviation.” About one-third of transatlantic flights to Europe were grounded.

Some flights to Ireland and Scotland resumed Friday as the ash cloud moved on, but with the volcano in Iceland still belching out ash, there was no clear sign as to when skies over Europe might again be safe for planes. Economists said it was too early to estimate the overall economic impact, but it could run into billions of euros.

“It comes at a difficult time,” said David Frost, director general of the British Chambers of Commerce. “Business is just recovering from a deep recession … our recovery depends on British business searching out new overseas markets and getting cargo across the globe.”

The airline sector has already been suffering from the global economic squeeze, high fuel costs and, for some, a spate of strikes. Last month, British Airways said a walkout by cabin staff cost it about $10 million a day, but the strike affected less than 40 percent of its flights, much less than those grounded by the dust cloud.

Some industry analysts said, however, that if the stoppage did not drag on too long, the airlines should be able to absorb the short-term impact, despite having to offer refunds, meals and hotel rooms for many customers left marooned by canceled flights.

The uncertainty dragged airline stocks down. Shares in British Airways had fallen by 3.42 percent close to the end of European trading Friday. Lufthansa slipped by 2.73 percent, KLM-Air France by 2.95 percent and the Irish low-cost carrier Ryanair by 3.12 percent.

http://www.globalpost.com/dispatch/europe/100416/volcano-economic-impact