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Volcano crisis cost airlines US$1.7 billion


Published on Apr 22, 2010

The International Air Transport Association (IATA) has estimated that the Icelandic volcano crisis cost airlines more than US$1.7 billion in lost revenue in the six days of flight disruptions following the initial eruption. For a three-day period (17-19 April), when disruptions were greatest, lost revenues reached US$400 million per day. IATA noted there are some cost savings related to the flight groundings. For example, the fuel bill is US$110 million a day less compared to normal. But airlines face added costs including from passenger care.

“For an industry that lost US$9.4 billion last year and was forecast to lose a further US$2.8 billion in 2010, this crisis is devastating,” said Giovanni Bisignani, IATA’s Director General and CEO. “It is hitting hardest where the carriers are in the most difficult financial situation. Europe’s carriers were already expected to lose US$2.2 billion this year - the largest in the industry.”

IATA added that at its worst point, 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. Following the crisis, IATA recommended three measures to mitigate the financial impact of the crisis. These include: relaxing airport slot rules, lifting restrictions on night flights, and addressing unfair passenger care regulations, such as easing airlines’ responsibility for paying for stranded
passengers’ hotels, meals and telephones.

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