Long-term economic impact will be minimal: experts
Friday, 23 April 2010
Europe's volcanic ash cloud is disrupting car production and the tourism industry as well as causing chaos for passenger and cargo air traffic, but the long-term impact on the European economy is likely to be minimal, economists and businesspeople said yesterday, report agencies.
If airline activity were to recover completely by the end of this week, the economic cost of the volcanic eruption in Icelandwould amount to no more than 0.1 per cent of European gross domestic product, according to Jacques Cailloux and Silvio Peruzzo, of Royal Bank of Scotland.
However, airlines announced they had lost at least $1.7 billion and criticised government actions during the volcanic ash crisis.
Giovanni Bisignani, the head of the International Air Transport Association, called the economic fallout from the six-day travel shutdown "devastating" and urged European governments to examine ways to compensate airlines for lost revenues, as the US government did following the Sept. 11, 2001 terror attacks.
Airlines lost $400 million each day during the first three days of grounding, Bisignani told a news conference Wednesday in Berlin. At one stage, 29 per cent of global aviation and 1.2 million passengers a day were affected by the airspace closure ordered by European governments, who feared the risk that volcanic ash could pose to airplanes.
"For an industry that lost $9.4 billion last year and was forecast to lose a further $2.8 billion in 2010, this crisis is devastating," Bisignani said. "Governments should help carriers recover the cost of this disruption."
Flights resumed in many areas, but the situation was anything but normal as airlines worked through an enormous backlog after cancelling over 95,000 flights in the last week.
Air traffic control agency Eurocontrol said it expected at least 15,000 of the continent's 28,000 flights to go ahead Wednesday across Europe, and possibly much more.
However, some scientists warn that the outlook would be more serious if the April 14 eruption of Eyjafjallajökull volcanic glacier were to be followed by an eruption of nearby Katla volcano, which is larger and more dangerous. On each of the three other occasions during the past 1,100 years when the smaller volcano has exploded - in 920, 1612 and 1821-23 - Katla has erupted soon afterwards.
The ash cloud has closed hundreds of airports and stranded up to 7m people abroad, of whom 2m -- less than 1 per cent of the European Union's workforce -- had expected to be back at their jobs Monday.
The disruption spread to the car industry when BMW said Tuesday it would halt production at three factories in Germany until Friday because of a shortage of interior and electronic parts normally delivered by air. Daimler, which makes Mercedes cars, said it might experience similar supply problems if European airspace remained closed.
Tourism officials in Cyprus said that if restrictions on flights from Germany, Russia and the UK continued for another 10 days, the island would receive 50,000 to 60,000 fewer tourists this month than in April last year, causing a drop in revenues.
If airline activity were to recover completely by the end of this week, the economic cost of the volcanic eruption in Icelandwould amount to no more than 0.1 per cent of European gross domestic product, according to Jacques Cailloux and Silvio Peruzzo, of Royal Bank of Scotland.
However, airlines announced they had lost at least $1.7 billion and criticised government actions during the volcanic ash crisis.
Giovanni Bisignani, the head of the International Air Transport Association, called the economic fallout from the six-day travel shutdown "devastating" and urged European governments to examine ways to compensate airlines for lost revenues, as the US government did following the Sept. 11, 2001 terror attacks.
Airlines lost $400 million each day during the first three days of grounding, Bisignani told a news conference Wednesday in Berlin. At one stage, 29 per cent of global aviation and 1.2 million passengers a day were affected by the airspace closure ordered by European governments, who feared the risk that volcanic ash could pose to airplanes.
"For an industry that lost $9.4 billion last year and was forecast to lose a further $2.8 billion in 2010, this crisis is devastating," Bisignani said. "Governments should help carriers recover the cost of this disruption."
Flights resumed in many areas, but the situation was anything but normal as airlines worked through an enormous backlog after cancelling over 95,000 flights in the last week.
Air traffic control agency Eurocontrol said it expected at least 15,000 of the continent's 28,000 flights to go ahead Wednesday across Europe, and possibly much more.
However, some scientists warn that the outlook would be more serious if the April 14 eruption of Eyjafjallajökull volcanic glacier were to be followed by an eruption of nearby Katla volcano, which is larger and more dangerous. On each of the three other occasions during the past 1,100 years when the smaller volcano has exploded - in 920, 1612 and 1821-23 - Katla has erupted soon afterwards.
The ash cloud has closed hundreds of airports and stranded up to 7m people abroad, of whom 2m -- less than 1 per cent of the European Union's workforce -- had expected to be back at their jobs Monday.
The disruption spread to the car industry when BMW said Tuesday it would halt production at three factories in Germany until Friday because of a shortage of interior and electronic parts normally delivered by air. Daimler, which makes Mercedes cars, said it might experience similar supply problems if European airspace remained closed.
Tourism officials in Cyprus said that if restrictions on flights from Germany, Russia and the UK continued for another 10 days, the island would receive 50,000 to 60,000 fewer tourists this month than in April last year, causing a drop in revenues.