Monday, April 19, 2010

Airlines approach EU for financial aid

S Kalyana Ramanathan / London April 20, 2010

‘Unprecedented situation having huge impact on customers and airlines alike’

Hit hard by a blanket ban on flying, over the last five days, airlines are now seeking financial compensation from the European Union and national governments.

Airline operators across Europe now believe that the economic consequences of the blanket ban are worse than the one they had faced after the 9/11 terrorists attack in the United States. Most airports have been shut since April 15, after an erupting volcano in southern Iceland started spewing ashes across the European airspace.

British Airways chief executive, Willie Walsh, said: “This is an unprecedented situation that is having a huge impact on customers and airlines alike. To assist us with this situation, European airlines have asked the EU and national governments for financial compensation for the closure of airspace. There is a precedent for this to happen as compensation was paid after the closure of US airspace following the terrorist events of 9/11 and clearly the impact of the current situation is more considerable.”

European Commission President Barroso on Sunday decided to set up an ad-hoc group to assess the impact of the situation created by volcanic ash clouds on the air travel industry and the economy in general. EU hopes to have the right analysis to be able to respond appropriately, if needed, and that any measures taken across the EU to respond to economic consequences of this situation are properly coordinated. EU has so far not directly committed to any financial package that can be given to the affected airlines.

IATA, the international aviation industry body had earlier last week said the industry is suffering a revenue loss of $200 million a day. British Airways today claimed that lost passenger and freight revenue together with the costs incurred on supporting passengers is approximately £15-20 million a day. BA also said it has significant funding available to it to sustain a considerable period of closure of the UK's airspace. At the start of the flying restrictions on April 14, 2010 it had more than £1.7 billion in cash and more than £400 million available credit lines which it can draw from, if necessary.

Today IATA, strongly criticised European governments for taking an ad-hoc approach to airport closures and said the decisions were based more on theoretical modelling rather than actual facts. IATA also criticised European governments for their lack of leadership in handling airspace restrictions in light of the Icelandic volcano eruption and urged a re-think of the decision-making process.

Giovanni Bisignani, IATA’s Director General and CEO, said, “Safety is our top priority. Airlines will not fly if it is not safe. I have consulted our member airlines that normally operate in the affected airspace. They report missed opportunities to fly safely. The European system results in blanket closures of airspace. I challenge governments to agree on ways to flexibly re-open airspace. Risk assessments should be able to help us re-open certain corridors, if not entire airspaces.”

IATA called for an urgent meeting of the International Civil Aviation Organization, the specialised agency of the UN, to define government responsibility for the decisions to open or close airspace in a coordinated and effective way based on real data and special operating procedures.

Despite mounting pressure from airline operators, as of now it looks unlikely that European governments will ease the ban on flying in a hurry. Governments across Europe are under tremendous pressure to keep safety as a top priority even if the chances of a risky flight seems remote in some parts. However EU Transport Commissioner Siim Kallas told reporters in Brussels that ‘it is clear that this is not sustainable. We cannot just wait until this ash cloud dissipates”.

Meanwhile, the British government has decided to deploy three Royal Navy ships to rescue British nationals stranded in continental Europe. An estimated 150,000 persons are said to be stranded in different parts of the world. As of noon on Monday, the government said it had not completely worked out modalities of the operations. No such rescue measures have been announced for British nationals stranded in other parts of the world including India (Asia).

The flight ban is expected to remain in force until early morning tomorrow. The European Organisation for Safety of Air Navigation, Eurocontrol said it expects between 8,000-9,000 flights to take place today in European airspace. "On a normal Monday, we would expect 28,000," it said.

UK airspace likely to open up

In a statement issued today, UK's flight navigation service provider NATS said the situation is continuously improving and Scottish airspace will be opened tomorrow for airlines to resume operations. NATS said, “From 0700 (local time), Tuesday, Scottish airspace will be open and south to a line between Teeside and Blackpool. Mainland Scottish airports will be open."

The volcanic eruption has reduced and the volcano is not currently emitting ash to altitudes that will affect the UK. Assuming there are no further significant ash emissions we are now looking at a continuously improving situation. It further said the latest Met Office advice is that the contaminated area will continue to move south with the possibility that restrictions to airspace above England and Wales, including the London area, may be lifted later tomorrow (Tuesday).

Since the closure of all airport in the UK since 15, April, this is the first time the navigation agency has said that flights can return to routine operations.

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