Volcano In Iceland: Over $1.7 Billion In Losses For Airlines
Airline Industry Faced With Tough Financial Reality After Iceland's Eyjafjallajokull Eruption
As the backlog of flights is slowly being eased around Europe, the airline industry is starting to count its losses that are now estimated to run into the billions. Airspace restrictions were lifted sporadically across Europe since the beginning of this week. UK airspace was officially re-opened yesterday.
The International Air Transport Association (IATA) that represents 230 airlines released a statement today, confirming that the volcano crisis in Iceland cost airlines more than $1.7 billion in lost revenue through Tuesday, six days after the initial eruption. The association says for a three-day period (17-19 April), when disruptions were greatest, lost revenues reached $400 million per day. Earlier, it was alleged that air carriers around the world were losing revenues of up to $200 million a day due to flight interruptions.
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New estimates are now rolling in as to the number of passengers affected by the delays. It is believed that 1.2 million passengers a day were affected by flight restrictions in the days after the eruption. IATA estimates that one third of global aviation has been impacted at the worst. The volcano crisis has even overshadowed the after-effects of 9/11 terrorist attacks that shut down US airspace for three days in 2001.
IATA is suggesting mitigating financial impact on the airline industry that is already bleeding billions of dollars. It is suggested that passenger care regulations be revised. Currently, insurers provide no relief for extraordinary situations, making airlines responsible to pay for hotels, meals and telephones of the affected passengers. ATA’s Director General and CEO urged governments to help carriers recover the cost of the disruption.
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. It is an extra-ordinary situation exaggerated with a poor decision-making process by national governments. The airlines could not do business normally.
Meanwhile, it is estimated that airlines will take weeks to fly all the stranded passengers. By 6 PM UK time on Wednesday, the National Air Traffic Services handled over 2,600 movements in UK airspace, approximately 80% of normal traffic levels. NATS is expecting a volume of traffic approaching 90 per cent from approximately 0700 tomorrow morning. At the same time, conditions around the movement of the layers of the volcanic ash cloud over the UK remain dynamic.