As Volcanic Cloud Clears, a View of Travel Industry Costs Emerges

volcanoThe massive ash cloud from Icelandic volcano Eyjafjallajokull's eruption has begun to disperse over Europe, at least for now. While commercial aviation has taken a large and highly publicized economic hit, travel industries on both sides of the Atlantic are still trying to calculate the volcano's impact on their business.

According to the European Travel Commission (ETC), tourism directly accounts for 5% of European GDP and another 10% indirectly. Last week, while the volcanic ash cloud moved into European airspace, the ETC issued its first quarterly report:European Tourism in 2010 -- Trends and Prospects.

According to the report, "the travel recovery is underway but remains fragile," with some European tourist destinations showing growth during the first quarter. The report forecast 2.4% growth in travel to European destinations this year, with that number rising to 3.8% in 2011, "when 2008 visitor levels will finally be regained."

But that was before the volcano.

Trains and Boats Deluged

Two of Britain's largest travel groups, TUI Travel and Thomas Cook, have lost tens of millions of dollars since the eruption began -- and have criticized Britain's government for underestimating the consequences of closing U.K. airspace "for such a protracted period of time."

The two companies had more than 100,000 customers stranded abroad when the ash plume emptied European airspace. Both companies have been providing support to their customers, with TUI expecting most of their stranded travelers to be "repatriated" by Friday.

Other travelers in Europe, meanwhile, have been rushing to alternative forms of transportation -- especially trains and boats. According to conglomerate Dubai World, its subsidiary P&O Ferries carried 21,000 foot passengers during the first six days of the crisis, "when normally they would have only 100 a day, and its call center has been deluged with over 157,000 calls since the crisis began Thursday, 15 April."

Eurostar, the high-speed rail service, says most of its trains are sold out until Friday, "especially those going to the U.K." The company is also adding extra trains to help stranded passengers

Long Time to Return to Normal

In North America, travel agencies have been working hard to help their clients stuck overseas. "We're keeping our customers informed using our blog and Twitter," says Julie Barsamian, marketing director at Cook Travel in New York, "but more importantly, our agents are watching flights for any available seats that pop up."

Many inconvenienced travelers have been trying to reroute their trips home via destinations not affected by the ash cloud, but the aviation disruptions are worldwide. One of Barsamian's agents worked through the night last week, assisting several passengers as they tried to get back to New York from Mumbai, India. One traveler came home "via Bangkok and Narita [Tokyo]," she says, "another through Hong Kong, and another through Seoul."

Even before the crisis, most airlines were already operating at near-full to full capacity. And the sudden influx of stranded travelers won't help matters. "You've got a backlog of people that are going to have to get on planes over the next week or two, once airspace opens up," says John Pittman, the American Society of Travel Agents' vice-president of industry and consumer affairs. "It's going to take a long time for...the system to get back to normal."

"Heightened Awareness" of Travel Problems

Other sectors of the travel industry are also taking hits. "Some cruise lines have tried to delay departure days to accommodate travelers who are stuck, but it hasn't worked", says Barsamian. Her company recently worked with two families who were traveling to Europe for cruise vacations. One family, she says, couldn't get to Italy in time and missed their boat. To make matters worse, the cruise line would refund the family just $2,000 of the $8,000 trip cost, "citing their failure to purchase full trip insurance."

There are also concerns Iceland's volcano, along with the recent devastating earthquakes in Haiti and Chile, may scare off many potential tourists just as the peak summer travel season begins.

"There's heightened awareness now of the problems of travel," says ASTA's Pittman

Staying Close to Home?

"A professional traveler is going to travel, there's no question about it. But the novice traveler -- I just don't know what they're going to do," says MedjetAssist President Roy Berger. His Alabama-based company provides emergency evacuation and repatriation to its members.

He says: "Anybody that's sitting on the fence and has the wherewithal to go but is deciding whether they should [travel] or not -- and looks at volcanic ash and looks at earthquakes and so on and so forth, they may not go or basically may decide to stay close to home."
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