Volcanic Ash from Iceland Ripples Through the Aviation Industry

The massive cloud of volcanic ash spewing from Iceland is doing more than creating dangerous flying conditions and stranding thousands of passengers on several continents. It's casting a pall over many parts of the economically stressed aviation industry.

Flight safety, of course, is the primary concern. "This is a dynamic situation", says Federal Aviation Administration spokesperson Paul Takemoto, referring to the ash cloud's movement. "Our command center in Herndon, Virgina, is keeping U.S. carriers apprised of the situation, and the carriers are making the decision as to whether or not to cancel flights."

U.S. airlines like Continental (CAL) and Delta (DAL) have already canceled scores of flights, while offering their customers a one-time, penalty-free change on affected flights.

Weeks of Disruptions?

On the other side of the Atlantic, discount carrier Ryanair, one of Europe's largest airlines, canceled over 600 flights on Thursday -- about 40% of its scheduled service. The company also offered affected Thursday passengers a full refund or free transfer to the next available flight.

Up to 6,000 flights in European airspace were canceled on the first day of the ash cloud reached the continent. And Eurocontrol expects about half of the 600 or so of the daily, trans-Atlantic flights between Europe and North America to be "impacted" on Friday.

There's a possibility the Icelandic ash cloud could ground or reroute flights for the next several days or even weeks -- leading to concerns about long-term economic effects. And there's plenty of precedent. The eruption of Mount Redoubt in Alaska last March and April forced Alaska Airlines to cancel nearly 300 flights, affecting more than 20,000 passengers over a two-week time period. And a federal study of Mount Redoubt's ash clouds from the 1989 and 1990 says those eruptions cost the aviation industry $101 million.

It's Not Easy to Reroute

Commercial aircraft might try flying longer routes around the ash plume, which will most likely mean higher fuel costs per flight, as well as less cargo in the hold due to the weight of the additional fuel. And it could also force carriers to reroute their European flights to new destinations.

"Southern Europe, right now, is the destination of choice, at least for rerouting airplanes," says Scott Johns, a former U.S. Air Force and Northwest Airlines pilot, now a professor at the University of Denver's Strum College of Law. Johns says rerouting flights means bringing extra crew personnel on each flight and trying to find gate space at airports not accustomed to the high volume of traffic seen at the major European hubs.

"It would be nice if a plane was like your car," he says, "but it takes a whole host of people and resources to get it from point A to point B, and the rerouting to serve new destinations takes months of planning."

Alliances: A Logistical Safety Net

One advantage the airline industry has during this crisis is the marketing alliances between many carriers. And these alliances do much more than share frequent-flier miles. "They've already worked out how to make the schedules more efficient, to move traffic, to share traffic efficiently, and that includes sharing ground resources, says Johns. "At many of the outlying airports there are contracting services that provide catering, baggage handling, the fuel. The marketing alliances have created a logistical safety net."

Still, air passengers are facing new headaches -- and new sets of delays and cancellations. Most carriers are already operating their planes at near-capacity, with little room to accommodate additional fliers.

Unlike disruptions caused by seasonal storms, many airlines will make exceptions for passengers inconvenienced by an "act of God," the legal term for unpredictable, catastrophic natural disasters like volcanoes or earthquakes.

"While there is no federal regulatory requirement to do so, most carriers will offer concessions when forced to cancel or delay flights due to a force majeure [extraordinary] event", says John Pittman, vice president of industry and consumer affairs for ASTA, the American Society of Travel Agents, in an e-mail response. Airlines will often provide customers with the option of a full refund or the ability to rebook on the next available flight with no fee. But Pittman warns that other perks, "such as hotel rooms, meals, etc., that a carrier may contractually be obligated to offer for non-force majeure events, may not be offered."

Not the Last Straw

Even if the Icelandic ash cloud were to dissipate tomorrow, the ripple effect of flight delays, cancellations and reroutings would take weeks to resolve.

"It will hurt their bottom line," says University of Denver's Johns. "I don't think it's going to put [the airlines] in jeopardy for the summer season. I don't think it's going to stop people from flying. Some logistical costs, with the [extra] crews and disruptions. . . will hurt them, but it's not the straw that breaks the camel's back."

It is however, creating a huge pain in the back for the airlines, passengers and the many services and businesses economically tied to unfettered air travel to Europe.