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Losses prompt airline aid request
Carriers say closures due to volcanic ash cloud have caused losses of more than $1bn.
Last Modified: 19 Apr 2010 21:27 GMT
Airlines said that their losses had reached more than $1 billion during the five-day shutdown [AFP]

Airlines have asked the European Union for financial assistance after saying that their losses from airspace closures have reached more than $1 billion.  

British Airways said it has been losing as much as $30 million per day since a volcano erupted last week throwing a cloud of ash into the skies above northern Europe.

"This is an unprecedented situation that is having a huge impact on customers and airlines alike," Willie Walsh, the British Airways chief executive, said.

Walsh said there was a precedent for compensation being paid as it was after the closure of US airspace following the September 11, 2001 attacks.

"We continue to offer as much support as we can to our customers, however, these are extraordinary circumstances that are beyond all airlines' control," he said.

Aid considered

Jean-Louis Borloo, the French environment minister, said a meeting of French airlines, travel agencies and the government was planned for Tuesday to examine possible state aid to the industry.

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"This aid will evolve of course based on the severity of the crisis. For that, we need a European preaccord that we have obtained; an accord in principle so this sector aid can be allocated," he told France's i-Tele.

But Peter Ramsauer, Germany's transport minister, brushed off the complaints from airlines.

"It is completely obvious that you have to calculate with such risks," he told the Deutschlandfunk radio station.

"And I defend myself right away against any calls to the government" to compensate for the corporate losses.

Nordic airline SAS said it was between $7 million and $12.5 million a day because of the shutdown, while Franco-Dutch airline Air France-KLM was losing about $47 million a day.

Germany's Deutsche Lufthansa AG said it still hoped to meet its financial targets for the year, but risks are growing that it will not due to the crisis.

Travel agencies also reported that they were suffering huge losses because of the situation.

Tim Ash, an analyst with the Royal Bank of Scotland, said that talk about bailouts for airlines would add to concerns about public finances as European nations continue to struggle to recover from recession.

"Presumably economies in Europe dependent on tourism will be disproportionately hit, depending on how long this all pans out.

"Unfortunately ... the likes of Portugal, Greece and Spain look vulnerable, as does Dubai."

Ferries booming

Some travel businesses were, however, booming as passengers tried all other means to get to their destinations.

Iata says the financial impact is now worse than the 9/11 attacks in the US [AFP]

The Viking Line passenger ferries between Finland and Sweden have sold out all cabins until Friday, company officials said, and demand is so high that passengers are being taken without a reserved cabin.

"We've opened the conference rooms and removed all chairs and desks so they can be used as places to sleep," Thomas von Hellens, the reception manager on a Viking Line ferry from Stockholm to Helsinki, said.

"They sleep on the floor, but no one's complaining," he said. "They are just happy to get across."

Scandlines said it was running at peak summer levels for passenger ferries between Germany and Denmark, while Polferries services between Stockholm and Gdansk, Poland, were "running out of tickets".

Rail services were also packed with people crowding into every available seat or standing in aisles.

Train operator Eurostar said it was carrying almost 50,000 passengers between London, Paris and Brussels and Germany's Deutsche Bahn said long-distance traffic has risen 30 per cent in recent days.

Travellers also reported huge fees being charged by some car rental and taxi companies looking to cash in on the travel chaos.

Source:
Al Jazeera and agencies
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