Europe Struggles to Get Out From Under the Volcano

Iceland Volcano Crisis: European Airlines, Governments Struggle to Adjust
Iceland Volcano Crisis: European Airlines, Governments Struggle to Adjust

Europe's aviation industry is trying to adapt to what could be its new normal this week in the wake of historic disruptions caused by the eruption of a volcano in Iceland.

More than 95,000 European flights have been canceled since last Thursday, when the massive ash cloud from Iceland's Eyjafjallajökull volcano began to drift into European airspace. European governments, under pressure from airlines and other businesses, began relaxing their restrictions on commercial aviation this week. The International Air Transport Association has also criticized European governments for their "lack of leadership" during the crisis, which the group says is costing airlines $200 million dollars a day in lost revenues, and inflicting billions of dollars in damage to the overall European economy.

Lufthansa (DLAKY) announced the resumption of all its long-haul flights on Tuesday, as well as some intra-European and domestic flights in Germany. The carrier says it is "keeping a close eye on developments and is in constant contact with the relevant ministries, aviation authorities, meteorological services and airports." But the company warns "it is not possible to predict how the air traffic situation in Europe will progress."

Air France (AFLYY) says it is progressively resuming its flight operations, with normal service for long-haul flights departing Paris airports, as well as a limited schedule of short- and medium-haul flights.

European Airspace Gradually Reopens

Ryanair (RYAAY), one of Europe's largest airlines, is extending the cancellation of its flights in northern Europe until at least Thursday, while canceling all flights between Ireland and the U.K. until Friday. The low-cost carrier says that, after safety, its top priority is "to ensure that no seat operates empty, while there are backlogs of disrupted passengers wishing to travel. Accordingly Ryanair will be operating extra flights on those routes where we believe there are significant numbers of disrupted passengers." The airline is also suspending its check-in and baggage fees for now, "so that our handling agents can prioritize getting flights out on time and processing standby passenger lists."

Late Tuesday evening, Great Britain's Civil Aviation Authority approved the re-opening of U.K. airspace. "We are ready to open, but until further notice passengers must contact their airline before traveling to the airport," said a statement from the British Aviation Authority. "Not all flights will operate during the early period of opening, and we will be doing everything we can to support airlines and get people moving."

British Airways (BAIRY) said the reopening of U.K. airspace would "enable us to begin the task of bringing our stranded customers home, as well as working towards normal operations." BA plans to operate all its long-haul flights, departing from London's Heathrow and Gatwick airports, on Wednesday -- but warned there would be short-haul flight cancellations to and from the London airports until around midday, local time, on Wednesday, "and possibly beyond that time."

British Airways estimates it has been losing about £15 million to 20 million ($23 million to 30.7 million) a day in passenger and freight revenue, "together with the costs incurred on supporting passengers," since the crisis began last Thursday. But the carrier says that, since the start of flying restrictions last week, it has more than £1.7 billion ($2.61 billion) in cash and more than £400 million ($614 million) available credit lines, which it can draw on if the need arises.

Many European airlines have been asking their national governments and the European Union for financial assistance during the crisis. But Ryanair CEO Michael O'Leary said he is "nervous" about such requests. "The same airlines who were losing money before the volcano will now be looking for compensation," he told the BBC, "not for the volcano but for their losses." O'Leary also called for the suspension of the E.U.'s passenger compensation rules, which allow passengers flying within the European Union to seek reimbursement from airlines, including hotel expenses, if their flights are delayed or canceled. He called such rules "ludicrous", especially "where clearly you're dealing with an unprecedented Act of God."