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Volcano chaos to cost airlines $1.7 billion

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Volcano chaos to cost airlines $1.7 billion
Photo: DPA
10:58 CEST+02:00
The grounding of European flights from volcanic ash cost airlines US$1.7 billion in lost sales alone, the head of their main industry body said Wednesday, calling for "urgent" government help.

"For an industry that lost $9.4 billion (€7 billion) last year and was forecast to lose a further $2.8 billion in 2010, this crisis is devastating," Giovanni Bisignani, chief of the International Air Transport Association (IATA), said in Berlin.

At its height, "the crisis impacted 29 percent of global aviation and affected 1.2 million passengers a day. The scale of the crisis eclipsed 9/11 when US airspace was closed for three days," he added.

For a three-day period from April 17-19, when disruptions were greatest, lost revenues reached $400 million per day, he said, calling an earlier IATA estimate of $200 million per day "conservative."

In addition to the loss in revenues, and despite paying less for fuel, carriers had to pay for accommodation for stranded customers as well as food and alternative modes of transport to get them home, he said.

"We've seen a week without revenue but that has not stopped the costs," Bisignani, whose organisation represents some 230 airlines worldwide, said.

Bisignani urged governments to look at ways to compensate airlines for the "extraordinary" crisis, something he said was exacerbated by "a poor decision-making process by national governments."

In the aftermath of the attacks on the United States on September 11, 2001, the US government provided $5 billion to compensate airlines for the costs of grounding the fleet for three days, he said.

"I am the first one to say that this industry does not want or need bailouts. But this crisis is not the result of running our business badly," he said.

"The airlines could not do business normally. Governments should help carriers recover the cost of this disruption."

He also called for "urgent" government measures like relaxing airport slot rules, lifting night flight restrictions and addressing "unfair" regulations whereby airlines have to pay for stranded travellers' hotels and meals.

"This crisis is an act of God, completely beyond the control of airlines. Insurers certainly see it this way," he said. "It is urgent that the European Commission finds a way to ease this unfair burden."

He also called for Europe to develop more quickly a unified policy on regulating its airspace.

"The chaos and economic losses of the last week are a clarion call to Europe's political leaders that a Single European Sky is critical and urgent," Bisignani said.

Europe's airspace reopened for business on Wednesday after all its major airports resumed operations, with three-quarters of flights scheduled in Europe expected to take place.

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