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Costs of Iceland Volcano Ash Cloud - |

Costs of Iceland Volcano Ash Cloud


Déjà vu for many as another Iceland Volcano Eruption threatens to blanket Europe with Volcanic ash.  Britain’s Civil Aviation Authority (CAA) announced it is likely that airlines will have flights from disrupted on Tuesday by the ash cloud billowing from the Grimsvotn volcano eruption in Iceland.

Britain’s Met Office is predicting a plume of ash from the would cover all of Ireland, Scotland and parts of northern England.

Iceland Volcano Eruption Threatens Europe Airspace

If you are planning a trip to Britain, Ireland or the rest of Europe while this eruption has been touted as less severe than last years eruption.  Aviation officials expect just half the cancellations seen last year. That ash cloud gives us  is a good starting point for what to expect. What is clear is though don’t expect the end of the world from it.

A look at last year’s volcanic crisis.

Most European airspace was closed between April 15-21, 2010 at some point

There were over 100,000 flights cancelled in total. The most was 19,000 in a day

There were more than ten million people stranded or unable to board flights at European airports

The Financial Cost

Airlines lost US$1.7 billion in lost revenues, with the transatlantic flights from New York to London the biggest loser.

European airports estimate they lost 250 million euros with the worst affected being Great Britain. Ireland and Finland where over 90 percent of flights were cancelled. The sheer size of Germany. France and Britain made them the biggest losers financially.

The discount airlines were the most hit with 61 percent of their flights cancelled

Airline Capacity Cut

Total Global airline capacity lost 30 percent

European airline capacity  lost 75 percent,

Africa airline capacity lost 30 percent,

Middle East airline capacity was cut by 20 percent

Airline kerosene demand fell by 1.2 million barrels a day. The average on a normal flight day is 4.3 million barrels. This was seen a s a negative for crude oil also with WTI losing 3% from Friday to Monday.

OECD estimated the ash cloud week hitting the European economy for US$5 billion


Tourism and GDP

Further than airlines is the impact on the periphery businesses.  The World Travel and Tourism Council says Travel and tourism accounts for around 4 percent of West European GDP.

PricewaterhouseCoopers estimated that each week of disruption cost around 0.025-0.05 percent of annual British GDP.

Keep in mind in this world of negative news reels the worst is also tended be exaggerated.  Take out your Bjork albums and listen to a little Icelandic charm on your iPod to get you through your trip.


(Sources: IATA, Eurocontrol, European Commission, Reuters)


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