Page last updated at 11:46 GMT, Wednesday, 21 April 2010 12:46 UK

Flight disruptions cost airlines $1.7bn, says IATA

Sir Richard Branson: "I don't think we will ever, ever see a blanket ban again"

Global airlines have lost about $1.7bn (£1.1bn) of revenue as a result of the disruptions caused by the Icelandic volcanic eruption, a body has said.

The International Air Transport Association (IATA) said that at its height, the "crisis" hit almost a third of global flights.

It also estimated that 1.2 million passengers a day were affected.

On Tuesday night, flights started landing in the UK after a six-day shutdown of UK airspace.

The decision to lift the ban followed safety tests that showed plane engines could cope in areas of low density ash.

A separate report by the the Centre for Economics and Business Research, commissioned by price comparison website Kelkoo, has estimated the cost to airlines of the disruptions to be 1.08bn euros ($1.45bn; £942m) over the six days.

David Frost, director general of the British Chambers of Commerce, told the BBC that the cost to the UK economy of the flight disruptions was likely to have been more than £100m a day.

Compensation call

IATA noted that airlines had saved about $110m a day on fuel while planes were not flying, but said they had also faced additional costs from looking after stranded passengers.

Airspace was being closed based on theoretical models, not on facts
Giovanni Bisignani, chief executive, IATA

"For an industry that lost $9.4bn last year and was forecast to lose a further $2.8bn in 2010, this crisis is devastating," said Giovanni Bisignani, chief executive of IATA.

Mr Bisignani also criticised governments for the haste with which they closed airspace, and called on them to provide compensation to the airlines.

"Airspace was being closed based on theoretical models, not on facts. Test flights by our members showed that the models were wrong.

"[The crisis] is an extraordinary situation exaggerated by a poor decision-making process by national governments. Governments should help carriers recover the cost of this disruption."

Budget airline Easyjet said it had lost £50m during the flight ban and that it would be seeking government compensation.

"Our view is that this is a natural disaster on a European scale, and it is only the governments which have the resources to deal with it properly," chief executive Andrew Harrison told the BBC.

Earlier this week, British Airways also called on the UK government for compensation and said it was losing £15m-£20m a day.

Europe's biggest travel operator, TUI Travel - the owner of Thomson and First Choice - said the disruption was costing it between £5m and £6m a day, while UK airports operator BAA said the ban on flights was costing a similar amount.

Wider impact

There are large numbers of businesses that rely on trade from airlines and airports that have struggled since the flight ban.

For example, Mister P laundry in Hounslow, near Heathrow, was forced to close temporarily at the weekend for the first time since opening 33 years ago. The business usually launders about 40,000 items a day, but 95% of those come from airlines.

But the effects of the crisis have also been felt outside of the travel industry, as tens of thousands of people have been stranded, unable to get to work.

Producers of perishable goods, such as food and flowers, have also been hit hard.

Carmaker Nissan had to suspend production for a day as it could not import components.

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