EU assesses economic fallout from travel chaos
On Sunday, the EU ordered an assessment of the billions of euros potentially lost since an Icelandic volcano erupted, prompting the biggest airspace shutdown since World War II.
The head of the European Union’s executive branch Jose Manuel Barroso has given the task of assessing the impact on the troubled airline industry to three of his top lieutenants; losses have already been pegged at over one billion euros (1.35 billion dollars) by one London analyst but the costs to Europe’s economy are much higher.
Millions of travellers remain stranded across the continent on Sunday with about 30 countries closing or restricting airspace amid safety fears since the volcano first began spewing out clouds of fiery ash miles into the sky on Wednesday.
A statement from Brussels said that the European Commission transport boss Siim Kallas, competition regulator Joaquin Almunia and economic affairs supremo Olli Rehn will together fully assess the impact of the situation created by the volcanic ash cloud on the economy, and the air travel industry in particular.0
The EU’s current Spanish chair later added that an emergency meeting by video-conference of the bloc’s 27 transport ministers was “envisaged” on Monday, with possible aid for carriers whose cashflow was already squeezed amid recession and rising fuel prices high on the agenda.
The International Air Transport Association has warned that the travel mayhem was costing airlines more than 200 million dollars (230 million euros) a day, prompting anger over safety testing mechanisms and suggestions that companies could require state aid like broken banks.
European air traffic control and safety agency Eurocontrol said that by the end of Sunday they expected that more than 63,000 flights in total will have been cancelled since Thursday.
Most of Europe remains a virtual no-fly zone.
By way of illustration, Rehn left three days of talks between European finance ministers in Madrid early on Sunday by car heading for Bordeaux in France before taking a train to Paris in a bid to get back to Brussels on Monday.
The Madrid meetings, especially a forum gathering European and Asia-Pacific nations that started on Saturday, were themselves heavily disrupted by the transport chaos with leading EU finance ministers from France, Germany and Italy all bailing out early.
Counterparts from a host of nations including China, Japan, Pakistan and guests Russia were also forced to pull out at the last minute, with European Central Bank chief Jean-Claude Trichet following suit.
German Chancellor Angela Merkel had still to make it back to Berlin on Sunday afternoon after being stranded in Lisbon.
Germany’s Lufthansa and Air Berlin meanwhile expressed industry anger on Sunday that decisions to close airspace were not based on proper testing and that their aircraft showed no signs of damage after flying through the ash-strewn skies without passengers.
Lufthansa spokesman Klaus Walter was quoted as saying that the flight ban, made on the basis just of computer calculations, is resulting in billion-high losses for the economy.
Nevertheless, European authorities will have to assess the precise costs to the airline industry for themselves before any decisions on granting state aid exemptions to companies can be taken, the EU’s Spanish presidency also said in Madrid.
The Spanish finance minister, Elena Salgado said the they only have very preliminary estimates and the situation could soon change for the better and therefore, an evaluation of the situation is required.
Commission expert Francisco Fonseca, speaking alongside Salgado in Madrid, stressed that EU law on possible state aid to airlines is “very clear. In exceptional circumstances, the commission will study the situation, in its own time.
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