Source: Reuters
(adds IATA estimate for cost to airlines, latest market prices, energy production unaffected)
By Peter Apps
LONDON, April 16 (Reuters) - The volcanic ash cloud making much of northern Europe a no-fly zone has hurt the prices of airline stocks, paralysed air cargo delivery and disrupted business and leisure travel. [ID:nSGE63F02E]
But analysts expect the overall economic impact to be minor, since the disruption appears unlikely to last continuously over a long period.
HOW LONG WILL THE DISRUPTION LAST?
This depends on how long the volcano under Iceland's Eyjafjallajokull glacier keeps erupting, whether it continues spewing ash, and whether winds carry the ash towards Europe.
The volcano's previous eruption lasted over a year, but changes in wind and weather patterns could disperse the ash; many analysts think the cloud will not linger over Europe for more than a few days at a time.
If the volcano does continue to erupt, occasional disruption will be possible over six months or more, experts say. Much will depend on whether Eyjafjallajokull triggers a new eruption from the nearby and larger Katla volcano, which has happened in the past. That could magnify the impact.
Countries are proving able to resume flights quite quickly when local conditions improve. Ireland has reopened its airspace and Britain says some of its northern airspace may reopen later on Friday. But the cloud continues to drift south, affecting more countries.
OVERALL ECONOMIC, MARKET IMPACT
Unless the cloud disrupts flights continuously for weeks, threatening factories' supply chains, economists do not think it will significantly slow Europe's shaky recovery from recession or affect second-quarter gross domestic product figures.
"The overall impact should be very limited even if the problem persists for a day or more...Just as people can't get into the UK, people can't get out," IHS Global Insight chief UK and European economist Howard Archer said in a research note.
"So the people stranded in the UK will have to find places to stay and eat, so they will be spending money here rather than abroad."
Business meetings have been cancelled across Europe as a result of staff being unable to attend, but analysts say they will largely be replaced with teleconferences or rearranged.
If extended disruption to air travel hits supply chains, factories will be able to reduce the damage by using sea, river or road cargo, or changing procurement plans.
The pan-European FTSEurofirst 300 <.FTEU3> stock index hit its highest level in nearly 19 months on Friday morning, suggesting little investor concern about the ash cloud. It fell 1.5 percent in the afternoon but traders mostly blamed Greece's debt crisis.
IMPACT ON AIRLINES
Around 17,000 flights were expected to be cancelled on Friday, with airspace closed across much of Europe.
Shares in Lufthansa
The disruption is costing airlines more than $200 million a day, air industry body IATA estimated. [ID:nLDE63F1SJ]
Fraport AG
Iceland's location means the eruption could prompt wider disruption to international flights.
"Iceland sits right on one of the key routes between Europe and the USA and...depending on meteorological conditions it could also affect flights from Europe to Asia, so there are two big international flows which could be affected by this," said John Strickland, director of air transport consultancy JLS Consulting.
"You can still get disruptions to other flights or have to take more circuitous routes, which adds costs and maybe even requires planes to land because they can't go on the direct route."
ALTERNATIVE TRANSPORT
Eurostar, which runs trains between London and the European continent, said trains were operating at full capacity and it might lay on additional trains if necessary.
London taxi firm Addison Lee said it had taken requests for journeys to Paris, Milan, Zurich and Salzburg in Austria.
AIR CARGO
Grounded air cargo flights have halted delivery of items such as microchips, flowers and mail. Europe's largest mail and express delivery company Deutsche Post
Switching to sea cargo might be an option for longer deliveries, although not for perishables such as flowers, but shipping analysts said it would likely take at least several more days before firms started rebooking by sea.
Pharmaceutical supplies in particular are often transported by air, but experts said there were sufficient stocks so there should be no serious shortages for now.
ENERGY
JBC Energy's model for European jet fuel consumption puts daily consumption at 1.17 million barrels a day, so assuming an estimated 80 percent of Europe's airports are shut for 48 hours, the disruption will cut 1.87 million barrels of demand.
"Some demand will simply disappear -- those who need to fly will eventually fly, but there will definitely be some flights that just do not take place," said JBC Energy oil analyst David Wech. [ID:nLDE63F17N]
European jet fuel price spot differentials to the ICE-traded gas oil contract
European oil, gas and electricity production is not expected to suffer. Some helicopter flights to and from oil rigs in the Norwegian Sea have resumed; the effect on solar power plants is unlikely to be greater than the impact from any other passing cloud, while wind power industry sources said cold volcanic dust on wind turbines should not cause any problems. [ID:nLDE63F0H3]
INSURANCE IMPACT
Airlines are expected to have little recourse to insurance firms. Most airlines are neither insured against cancellations nor business disruption at airports. [ID:nLDE63F0II]
Insurer Munich Re
HEALTH IMPACT
The World Health Organisation warns the dust could cause problems for those with breathing difficulties, though it has not yet assessed this particular eruption. [ID:nLDE63F0YZ]
A Scottish expert on respiratory disease told Reuters that the low-toxicity ash falling on Britain was unlikely to do much harm as a very high exposure would be needed to have much effect on people.
CLIMATE, AGRICULTURAL IMPACT
Scientists say the eruption does not seem to have produced enough dust or gas to alter the climate or impact agriculture, and should have no effect on global warming trends. A larger eruption from the Katla volcano might be a different matter.
(Editing by Andrew Torchia)
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FACTBOX-Airports and airspace closed by ash cloud
17 Apr 2010 11:24:42 GMT
Source: Reuters
April 17 (Reuters) - Large parts of Europe enforced no-fly rulings for a third day on Saturday because of a huge ash cloud from an Icelandic volcano that has caused the worst air travel chaos since the Sept. 11 attacks.
Here is a list of countries affected as of 1125 GMT on Saturday:
AUSTRIA - Airspace closed until at least Saturday 1800 GMT.
BELGIUM - Airspace closed until at least Saturday 1800 GMT, main airline, Brussels Airlines, cancels all flights until Monday.
BELARUS - Airspace closed on Saturday for flights operating between 6,000 metres and 11,000 metres. Some routes east and south open.
BRITAIN - Airspace closed until at least 2400 GMT Saturday.
DENMARK - Airspace closed until at least 2400 GMT Saturday.
ESTONIA - Airspace closed until at least 2400 GMT Saturday.
FINLAND - Airspace closed until at least 1200 GMT Sunday.
FRANCE - Airports across northern France closed until at least 1200 GMT on Saturday
GERMANY - German airspace shut until at least 2400 GMT Saturday.
GREECE - Flights to northern Europe cancelled.
HUNGARY - Airspace closed until at least 1700 GMT Saturday.
IRELAND - Airspace closed until at least 1700 GMT Saturday.
ITALY - Northern airspace closed until at least 1800 GMT Saturday.
LUXEMBOURG - Airspace closed until at least 1200 GMT Saturday.
NETHERLANDS - Airspace closed until at least 1200 GMT Saturday.
POLAND - Airspace closed since Friday, partial reopening possible on Sunday.
PORTUGAL- Airports operating for flights to and from everywhere other than northern Europe.
ROMANIA - Northern airspace closed from 0000 GMT Saturday, to close all airspace from 1500 GMT Saturday.
RUSSIA - All airports open.
SLOVAKIA- Airspace closed as of 1300 GMT on Friday.
SPAIN - Madrid airport open, but carrier Iberia cancels all its European flights except those to or from Portugal, southern Italy, Greece and Istanbul in Turkey.
SWEDEN - Airspace closed on Saturday.
SWITZERLAND - Airspace closed until at least 1800 GMT Saturday, except for aircraft able to fly at altitudes of 36,000 feet (11,000 metres) or higher.
UKRAINE - Kiev airport closed to flights until at least 1200 GMT Saturday. Airports in Lvov, Odessa, Donestsk, Simferopol and Dnepropetrovsk also closed for an unspecified period. (Compiled by London World Desk)
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SCENARIOS-Potential scenarios for volcano gas cloud crisis
18 Apr 2010 11:04:45 GMT
Source: Reuters
By Peter Apps
LONDON, April 18 (Reuters) - The economic impact of air travel disruption from a volcanic cloud over Europe depends almost entirely on how long it lasts -- something even experts say they cannot predict.
Below are several scenarios for how events could pan out.
CLOUD CLEARS SWIFTLY
The volcano could cease erupting, simply stop emitting ash, winds could shift away from Europe or the gas cloud could be dispersed unexpectedly quickly -- although so far none of these shows any signs of happening.
Airlines and air freight companies would immediately scramble to make up for lost time, repatriate and relocate passengers, aircraft and cargo.
-- Airlines would still have lost some $200 million a day during the shutdown, the International Air Transport Association says. Airline stocks would likely still fall on Monday as markets took into account losses over the weekend, which were not factored in on Friday.
-- Even if the cloud clears, some travel will still be cancelled in the coming days. Some firms are asking employees to cancel non-essential European flights over the next 7-10 days.
-- Airlines might show greater interest in taking out cancellation insurance. German insurer Munich Re
CLOUD CLEARS, ERUPTION CONTINUES
Experts warn that as long as the eruption continues, the risk remains that a renewed outflow of ash or certain wind patterns could produce the same effect again in the coming months.
This time, airlines would be less taken aback but there would still be little they could do to prepare. The threat of a renewed shutdown might deter both business and leisure travellers from booking flights, holidays and hotels, hitting the industry even if the cloud itself never returned.
-- Airline industry stocks could underperform as markets factor in a risk premium. Rail, road, sea cargo and teleconference firms could see an increase in demand.
-- Firms might take on additional stocks to reduce their reliance on "just-in-time" resupply by air cargo.
-- Any return of the cloud would again hit airline and travel stocks as well as potentially undermining regional growth.
-- Much would depend on whether the current eruption triggers Iceland's nearby and much larger Katla volcano, further increasing the potential impact.
CLOUD REMAINS, EUROPE REMAINS SHUT DOWN
If the cloud remains stubbornly over Europe for a sustained period of time, perhaps weeks or longer, the travel sector would take a serious hit. Wider industries would also be affected from high-tech manufacturing to supermarkets and event organisers.
-- This would be devastating news for the airline sector, possibly driving some of the weakest operators to the wall.
-- Overall European growth might be affected, slowing the recovery from recession. Already heavily indebted governments would struggle to find the funds for support programmes. Europe might lag further behind the rest of the world in the global recovery.
-- Teleconference, shipping, rail and road transport operators would benefit. So would airports just outside the cloud, suddenly in great demand from airlines and shipping firms as new hubs. That could benefit countries along the edge of the cloud including Ukraine, Turkey, as well as Portugal, Italy, Greece and Spain -- the euro zone fringe economies worst hit by the financial crisis. Britain's Royal Mail is already shipping and trucking airmail to the United States to Spain for onward flights.
-- Western military resupply flights to Afghanistan would be heavily affected. Western European troop contributors would become entirely dependent on the United States for supplies and medical evacuation flights. U.S. forces would also be heavily affected if they could no longer use their logistics and medical centre in Ramstein, Germany. This comes days after an uprising in Kyrgyzstan ushered in a pro-Russian government that may want the U.S. to vacate its Manas airbase there, another key hub.
-- Major international meetings may have to be cancelled, rescheduled or simply go ahead without senior European policymakers. That might further weaken Europe's geopolitical relevance at a time when it is already threatened by the rise of emerging economies and internal differences over dealing with the Greek debt crisis.
(Editing by Mark Trevelyan)
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Europe extends flight ban as ash cloud continues to drift
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Sunday, April 18, 2010
REYJKAVIK - Agence France-Presse
This aerial view shows the Eyjafjallajokull volcano billowing smoke and ash during an eruption on Saturday. AFP photp
This aerial view shows the Eyjafjallajokull volcano billowing smoke and ash during an eruption on Saturday. AFP photp
A cloud of volcanic ash smothering Europe tightened its powerful control of the skies on Sunday, enforcing a fourth day of travel misery for millions of travelers.
About 30 countries have now closed or restricted their airspace, with the cloud of fine mineral dust particles from Iceland now extending from the Arctic Circle in the north to the French Mediterranean coast in the south and from Spain into Russia.
Some countries, such as the Netherlands, started carrying out test flights to see if jets could safely fly however. Dutch carrier KLM said initial inspections afterward showed no damage or irregularities from the ash in the air that has led to a ban on air travel over much of Europe since Friday.
The airline says it now plans to return seven airplanes without passengers to Amsterdam from Duesseldorf Sunday.
"We hope to receive permission as soon as possible after that to start up our operation and to transport our passengers to their destinations," said Chief Executive Peter Hartman, who was aboard Saturday's flight.
Britain extended its ban on flights in its airspace until late Sunday and British Airways cancelled all flights in and out of London for the whole day.
Germany and most Scandinavian and central European countries also kept the flight ban in place, extending the biggest airspace shutdown since World War II.
With the blanket spreading, Italy and Spain said they would not allow flights into the northern parts of their countries. The cloud is now heading toward Greece and into Russia, weather experts said.
With hundreds of thousands of travelers now stranded around the globe, prevailing winds blowing the massive cloud from Iceland toward Europe could go on until the middle of the week, Iceland's Meteorological Office has warned.
"The ash will continue to be directed towards Britain and Scandinavia," Teitur Arason, a meteorologist at the Icelandic Meteorological Office, told Agence France-Presse.
Poland shut its airspace until further notice.
Some governments, such as France, have set up emergency services to work out how to get stranded nationals home.
Some 17,000 flights in European airspace on Saturday were cancelled due to the cloud, said Eurocontrol, which coordinates air traffic control in 38 nations.
Only about 5,000 out of 22,000 flights in Europe were able to operate, the agency said.
And out of 337 scheduled flights by US carriers to and from Europe, 282 were cancelled Saturday, the Air Transport Association of America said.
The impact of the shutdown is likely to exceed the airspace shutdown after the September 11, 2001 attacks, the International Civil Aviation Organisation said.
Stranded passengers seek alternatives
Stranded holidaymakers and business travelers sought any means possible to get home – or contented themselves with just staying put.
"EasyJet has assured us that we will be reimbursed for accommodation until Wednesday" when the next flight is due out, said British holidaymaker Karen Apple at Faro airport in Portugal's Algarve region, the Correio da Manha newspaper reported.
British businessman Tom Noble said he had to buy a women's bicycle to board a ferry home from France as the operator had no foot passenger tickets left and would only allow him on if he was a genuine cyclist.
Iceland's Eyjafjoell volcano erupted on Wednesday, sending ash drifting towards Europe at an altitude of about 6,000 to 9,000 meters.
Europe's three biggest airports – Heathrow, Paris-Charles de Gaulle and Frankfurt – were closed Saturday, leaving passengers stranded across the world as a global flight backlog built up.
Australia's Qantas Airways meanwhile said Sunday flights to Europe would be cancelled for a third day.
The Eurostar Channel tunnel rail service reported thousands more passengers than normal were set to travel on its trains between London and continental Europe on Saturday.
In the past 20 years, there have been 80 recorded encounters between aircraft and volcanic clouds, causing the near-loss of two Boeing 747s with almost 500 people on board and damage to 20 other planes, experts said.
The International Air Transport Association estimated the shutdown was costing airlines more than $200 million dollars (230 million euros) a day.
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FACTBOX-European airports and airspace closed by ash cloud
20 Apr 2010 08:44:29 GMT
Source: Reuters
April 20 (Reuters) - Large parts of Europe enforced no-fly rulings for a sixth day on Tuesday because of the huge ash cloud from an Icelandic volcano, but some countries were easing the restrictions.
Here is a list of countries as of 0800 GMT on Tuesday and their airspace status:
* Denotes new or updated item
AUSTRIA - Airspace open as of 0300 GMT Monday.
BELGIUM - Airspace closed until Tuesday 0600 GMT. May then allow some planes to land and from 1200 GMT some to depart. Airlines have been allowed to bring planes back to Belgium without passengers or freight.
BOSNIA - Airports open.
* BRITAIN - Scotland's airspace is open. The rest of Britain's airspace remains closed to flights below 6,000 metres. National Air Traffic Service will reassess position at 1800 GMT.
BULGARIA - All airspace and airports open.
CZECH REPUBLIC - Airspace and airports open as of 1000 GMT on Monday.
* DENMARK - Airspace above 20,500 feet (6 km) will stay open to transit traffic while the closure below that level is extended until at least 2400 GMT on Tuesday.
ESTONIA - Airspace will be closed from 0700 GMT until at least 1200 GMT because of the return of the ash cloud to northern Estonia.
FINLAND - Airspace closed until 1500 GMT Tuesday.
* FRANCE - French airlines will try to resume 75 percent of long-haul flights from Paris and 25 percent of internal flights on Tuesday.
GERMANY - Airspace closed, with some exceptions, until at least 1200 GMT Tuesday.
* HUNGARY - Hungarian airspace is fully open, the air traffic authority said around 0800 GMT on Tuesday.
IRELAND - The Irish Aviation Authority said it was keeping its airspace closed until at least 1200 GMT on Tuesday because of the density of volcanic ash.
ITALY - Airspace to reopen from 0600 GMT.
LATVIA - Airspace open from 0600 GMT.
LITHUANIA - Airspace open, but most flights cancelled.
LUXEMBOURG - Airspace closed until Monday 1800 GMT.
MONTENEGRO - Airports open.
NETHERLANDS - Passenger flights left Amsterdam's Schipol Airport from 1800 GMT Monday.
* NORWAY - Airspace partly closed. Details not yet available.
POLAND - Polish airspace was closed again on Tuesday morning, the aviation authority said.
ROMANIA - Airspace fully reopened.
RUSSIA - All airports open. Aeroflot is flying to the United States via the North Pole.
SERBIA - Airports open.
SLOVAKIA - Eastern airspace open, as is the rest of its airspace for flights above 7,500 metres. Bratislava airport closed.
* SLOVENIA - Slovenia partly closed its airspace again at 0200 GMT on Tuesday until at least 1300 GMT.
SPAIN - 17 airports open.
SWEDEN - Airspace open for flights north of a line stretching from the southern city of Gothenburg to Stockholm. Scandinavian Airlines resuming domestic flights in unrestricted airspace as well as flights between Stockholm and Oslo.
SWITZERLAND - Switzerland's civil aviation authority has decided to reopen Swiss air space from 0600 GMT on Tuesday following four successful test flights.
TURKEY - All airports open. Planes flying out of the Black Sea cities of Samsun, Sinop and Zonguldak have been advised not to fly higher than 6,000 metres.
UKRAINE - Kiev's Borispol airport open.
(Compiled by London Editorial Reference Unit)
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