The ‘island mountain glacier’ cost airlines billions in revenue. Travel industry experts are still calculating its long term costs.
As the cloud from the volcanic eruption clears and airlines start services again, the industry is taking stock of revenue that has turned to ashes. The International Air Transport Association (IATA) estimated that the Icelandic volcano crisis cost airlines more than $1.7 billion in lost revenue, six days after the initial eruption.
For a three-day period (17-19 April), when disruptions were greatest, lost revenues reached $400 million per day.
“At the worst, the crisis impacted 29% of global aviation and affected 1.2 million passengers a day. The scale of the crisis eclipsed 9/11 when US airspace was closed for three days,” said Giovanni Bisignani, IATA’s Director General and CEO. Flights were banned and airports closed to prevent the ash – a mixture of glass, sand and rock particles – from seriously damaging aircraft engines.
India In India the impact was less but experts still likened it to one of the worst crises to have hit the industry. “The major impact is not just now but in the six months to come.
Traditionally, flights to the US are routed through Europe. You have to remember that there is hardly any seat available and the waiting list has to be taken care of as well,” said P R Srinivas, Industry Lead, Tourism, Hospitality and Leisure, Deloitte India.
Losses amounted to Rs20 crore a day. Air India, Jet Airways and Kingfisher Airlines cancelled over 50 flights in four days, as airports in Europe remained shut, hitting travel to the US and Canada.
“We are now getting into the lean season for inbound. Summers are the peak season for outbound. And that is going to have a large impact. Tourism is going to be impacted, not just airlines,” said Srinivas, calling it the “worst disruption since World War II”.
Other costs
The international airports council, ACI, said a total of 313 airports had been paralysed by the restrictions and the global backlog was affecting more than 6.8 million travellers. Even the IATA estimates did not take into account factors such as additional costs for re-routing aircraft, care for stranded passengers and stranded aircraft.
“It is a temporary issue but the impact on airlines is not just in terms of flights. Airports make more money since they charge airlines on all sorts of things such as parking, landing.
Interline arrangements are hugely impacted affecting the bottomline. These make up for 20% of the traffic and roughly 50% of revenue,” said Vineet Malhotra of Kale Consultants, a strategic partner for IATA in India.
Some airports such London Heathrow and Dubai waived parking fees and did not charge for repositioning flights, easing the burden on airlines who incurred extra costs from passenger care.
Tokyo’s Narita airport offered stranded passengers free showers, hamburgers, access to rest areas and bus tours of the city. In Singapore, France’s ambassador urged French residents of the island state to take in compatriots stranded at the airport.
“The fuel bill is $110 million a day less compared to normal. For an industry that lost $9.4 billion last year and was forecast to lose a further $2.8 billion in 2010, this crisis is devastating. It is hitting hardest where the carriers are in the most difficult financial situation,” said Bisignani.
Price rise? Going forward, a key concern for travellers is price hike when traffic returns to normal. Goa regulars from countries such as the UK, were already making plans for the next year.
“Rumour has it that prices will increase for next year to try and recoup some of the airlines losses, so might be advisable to rebook asap. We have booked and paid for next January so hopefully will avoid any increases,” said one such traveller on a forum. “I am not sure there will be an increase in prices because of the increased demand,” said Srinivas.
The estimated number of flight cancellations worldwide is said to be 100,000. This the latest in the series of setbacks to airlines already beleaguered by high jet fuel costs, earthquakes and hurricanes affecting travel to the Caribbean and South America, and the recession. Last year, the industry lost $9.4 billion, according to IATA.
The cost of Eyjafjallajokull
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The ‘island mountain glacier’ cost airlines billions in revenue. Travel industry experts are still calculating its long term costs.
As the cloud from the volcanic eruption clears and airlines start services again, the industry is taking stock of revenue that has turned to ashes. The International Air Transport Association (IATA) estimated that the Icelandic volcano crisis cost airlines more than $1.7 billion in lost revenue, six days after the initial eruption.
For a three-day period (17-19 April), when disruptions were greatest, lost revenues reached $400 million per day.
“At the worst, the crisis impacted 29% of global aviation and affected 1.2 million passengers a day. The scale of the crisis eclipsed 9/11 when US airspace was closed for three days,” said Giovanni Bisignani, IATA’s Director General and CEO. Flights were banned and airports closed to prevent the ash – a mixture of glass, sand and rock particles – from seriously damaging aircraft engines.
India
In India the impact was less but experts still likened it to one of the worst crises to have hit the industry. “The major impact is not just now but in the six months to come.
Traditionally, flights to the US are routed through Europe. You have to remember that there is hardly any seat available and the waiting list has to be taken care of as well,” said P R Srinivas, Industry Lead, Tourism, Hospitality and Leisure, Deloitte India.
Losses amounted to Rs20 crore a day. Air India, Jet Airways and Kingfisher Airlines cancelled over 50 flights in four days, as airports in Europe remained shut, hitting travel to the US and Canada.
“We are now getting into the lean season for inbound. Summers are the peak season for outbound. And that is going to have a large impact. Tourism is going to be impacted, not just airlines,” said Srinivas, calling it the “worst disruption since World War II”.
Other costs
The international airports council, ACI, said a total of 313 airports had been paralysed by the restrictions and the global backlog was affecting more than 6.8 million travellers. Even the IATA estimates did not take into account factors such as additional costs for re-routing aircraft, care for stranded passengers and stranded aircraft.
“It is a temporary issue but the impact on airlines is not just in terms of flights. Airports make more money since they charge airlines on all sorts of things such as parking, landing.
Interline arrangements are hugely impacted affecting the bottomline. These make up for 20% of the traffic and roughly 50% of revenue,” said Vineet Malhotra of Kale Consultants, a strategic partner for IATA in India.
Some airports such London Heathrow and Dubai waived parking fees and did not charge for repositioning flights, easing the burden on airlines who incurred extra costs from passenger care.
Tokyo’s Narita airport offered stranded passengers free showers, hamburgers, access to rest areas and bus tours of the city. In Singapore, France’s ambassador urged French residents of the island state to take in compatriots stranded at the airport.
“The fuel bill is $110 million a day less compared to normal. For an industry that lost $9.4 billion last year and was forecast to lose a further $2.8 billion in 2010, this crisis is devastating. It is hitting hardest where the carriers are in the most difficult financial situation,” said Bisignani.
Price rise?
Going forward, a key concern for travellers is price hike when traffic returns to normal. Goa regulars from countries such as the UK, were already making plans for the next year.
“Rumour has it that prices will increase for next year to try and recoup some of the airlines losses, so might be advisable to rebook asap. We have booked and paid for next January so hopefully will avoid any increases,” said one such traveller on a forum. “I am not sure there will be an increase in prices because of the increased demand,” said Srinivas.
The estimated number of flight cancellations worldwide is said to be 100,000. This the latest in the series of setbacks to airlines already beleaguered by high jet fuel costs, earthquakes and hurricanes affecting travel to the Caribbean and South America, and the recession. Last year, the industry lost $9.4 billion, according to IATA.
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