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European Airlines Seek Aid for Ash Losses

British Airways Plc said European carriers are seeking compensation as unprecedented airspace closings following the volcanic eruption in Iceland cost the industry an estimated $300 million a day in lost sales.

Airlines have asked national governments and the European Union for financial payments, Chief Executive Officer Willie Walsh said in a statement, adding that money was paid after the Sept. 11 terror attacks on the U.S. “and clearly the impact of the current situation is more considerable.”

British Airways, Deutsche Lufthansa AG and Air France-KLM Group all said today that airspace restrictions should be lifted, citing test flights into the ash cloud that showed no sign of impairment to aircraft performance. About 81,000 services have been canceled since the Eyjafjallajökull volcano erupted on April 14, spewing dust that could cause jet engines to fail by melting and then congealing in the turbines.

“These decisions were based on theoretical models,” International Air Transport Association Chief Executive Officer Giovanni Bisignani said today in Paris. “But the losses and chaos are not theoretical. When in a few weeks this situation is solved it will be a very embarrassing story for Europe.”

Photographer: Thierry Stefanopoulos/Bloomberg

An empty tarmac is seen at Charles De Gaulle International Airport in Paris, on April 16, 2010. Close

An empty tarmac is seen at Charles De Gaulle International Airport in Paris, on April 16, 2010.

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Photographer: Thierry Stefanopoulos/Bloomberg

An empty tarmac is seen at Charles De Gaulle International Airport in Paris, on April 16, 2010.

European airline stocks slumped, with Air France-KLM dropping 2.9 percent, British Airways 1.4 percent and Lufthansa 2.6 percent. Ryanair Holdings Plc, the region’s biggest discount carrier, fell as much as 3.1 percent.

Partial Reopening

Volcanic activity in Iceland has eased, with ash no longer being emitted to altitudes that will affect the U.K., National Air Traffic Services said in a statement, announcing that airports in Scotland and northern England will reopen from 7 a.m. tomorrow. If conditions continue to improve, it’s possible that airspace in southern Britain will also reopen, it said.

Brussels-based Eurocontrol predicts as much as half of Europe’s airspace may be “risk free” today, and Germany’s Lufthansa said limited services will resume this evening. Fifty long-haul planes will also fly to Frankfurt, Dusseldorf and Munich with stranded passengers, spokeswoman Claudia Lange said.

About 70 percent of European services remain grounded today as the ash cloud stretches from Moscow almost as far as Canada, according to Eurocontrol, which oversees flight paths.

European Union Competition Commissioner Joaquin Almunia said restrictions on aid may be eased as the impact of the disruption is discussed today. Airlines are trying to provide as much support as possible to customers but the situation is “unprecedented,” Walsh said.

Cost Mounts

Lost revenue from the restrictions amounts to as much as $300 million a day, according to IATA, which estimates that it will take as many as six days for air traffic to get back to normal once a ban ends, as carriers need to work through a backlog of stranded passengers and reposition their fleet.

Governments should try to keep services running using flight paths that are clear of ash, the industry group said.

British Airways said a trial flight at a range of altitudes yesterday showed no deterioration in engine performance and produced no odors in the aircraft cabin. Flight recorders, structural checks and monitoring by engine maker Rolls Royce Plc also revealed no impact from the dust.

‘Fresh Evidence’

“The analysis we have done so far, alongside that from other airlines’ trial flights, provides fresh evidence that the current blanket restrictions on airspace are unnecessary,” Walsh said. “We believe airlines are best positioned to assess all available information and determine what, if any, risk exists to aircraft, crew and passengers.”

British Airways has canceled all flights to and from London through tomorrow and is losing 20 million pounds ($30 million) a day in revenue, according to Walsh.

Air France-KLM, losing about 35 million euros ($47 million) a day, said a flight from Paris to Toulouse yesterday with an Airbus SAS A320 showed “no anomalies.” The KLM unit also operated 10 test flights with only a crew over the weekend and concluded that the quality of the atmosphere is “in order.”

Lufthansa, which sent 10 aircraft from Munich to Frankfurt to reposition its fleet on April 17, has been “appealing to the government day and night to get an easing of the ban,” spokesman Andreas Bartels said. The Association of European Airlines, which represents 36 carriers, also said it’s seeking an “immediate” reassessment of the restrictions on services.

Aircraft Carriers

U.K. Prime Minister Gordon Brown said he’s examining the financial impact of the shutdown on airlines and associated companies. Royal Navy aircraft carriers may be used to bring Britons back across the English Channel and people stuck in Asian and the America’s could be flown to Spain and then put on buses, trains and ferries to complete their journey, he said.

Spain, holder of the European Union presidency, called a video conference among transport ministers today to discuss emergency plans.

“With 313 airports paralyzed, the impact is already worse than 9/11,” Olivier Jankovec, director general at Airports Council International, said in a statement. “While safety remains a non-negotiable priority, it is not incompatible with our legitimate request to reconsider the present restrictions.”

The disruption to European air traffic caused by the cloud of volcanic ash is “unsustainable,” Transport Commissioner Siim Kallas told a briefing in Brussels yesterday. The Commission will set up a group to assess the impact of the ash cloud on the economy and European travel.

French Flights

France’s airspace in the north and east, which includes the airports of Paris and Lyon, will remain closed until at least the morning of April 20. Civil aviation authorities reopened the airspace over the southwest, allowing Air France to fly seven long-haul flights from Toulouse today.

Germany’s DFS flight safety authority shut all of the country’s airports by 10 p.m. yesterday after easing a ban earlier on hubs including Berlin and Frankfurt.

Oslo’s Gardermoen airport opened its airspace for domestic and international flights again this morning. Sweden re-opened the area north of Soderhamn, including Kiruna airport. Airspace in northern Spain was shut.

“We hope to receive permission as soon as possible after that to start up our operations and to transport our passengers to their destinations,” KLM Chief Executive Officer Peter Hartman said in a statement.

Asian Impact

Airlines in the Asia-Pacific region canceled most Europe- bound flights. Qantas Airways Ltd. axed services to European destinations through tomorrow. The shutdown is costing the Australian carrier as much as A$1.5 million ($1.4 million) a day, according to David Epstein, a spokesman.

Thai Airways International Pcl is losing 100 million baht ($3.1 million) a day from the closure, President Piyasvasti Amranand said in a Bloomberg TV interview today.

Singapore Airlines Ltd., Air China Ltd., Japan Airlines Corp., All Nippon Airways Co., Korean Air Lines Co. and Cathay Pacific Airways Ltd. have also canceled some flights to Europe.

United Parcel Service Inc., the world’s largest package- delivery firm, began trucking items from Asia through Istanbul and into Europe. The company made a flight from Dubai to Istanbul yesterday, then put those goods on trucks bound for Europe, according to spokesman Norman Black. UPS’s air hub in Cologne, Germany has been closed since April 16.

Forecast Unchanged

Haraldur Eiriksson, a meteorologist at the Icelandic meteorological office, predicts little change in the ash pattern in Europe at least through April 23.

“This could have an ongoing impact on European air travel,” he said. “The forecast hasn’t changed, although the height the volcano is spewing the ash into has decreased from 5 to 6 kilometers to less than 3 kilometers and now it can’t be seen on our radars.”

Volcanic eruptions may continue for months and curtail European air traffic, said Sigrun Hreinsdottir, a geophysicist at the University of Iceland in Reykjavik. “It could erupt, pause for a few weeks, and then possibly erupt again.”

The last eruption of the 1,666-meter (5,466-foot) Eyjafjallajökull in December 1821 continued until January 1823. The current blast has sent ash as high as 7 kilometers (4.5 miles), according to Gudrun Larsen, a volcanologist at the University of Iceland. The magma had to pierce 200 meters of ice before reaching the air, she said.

“We really don’t know if this eruption is going to last as long as the previous one, but we can’t say it’s not a possibility,” Larsen said by telephone.

Delta, AMR

The U.S.-based Air Transport Association said yesterday that 310 non-stop flights scheduled between the U.S. and Europe, or 92 percent of the total for the day, were canceled.

Delta Air Lines Inc., the world’s largest carrier, scrapped 97 flights yesterday to and from Europe, spokesman Anthony Black said. A further 49 flights have been grounded for today. AMR Corp.’s American Airlines canceled 60 European flights. Continental Airlines Inc. canceled 66 flights today between the U.S. and Europe, while US Airways Group Inc. scrubbed 13, the carriers said.

The eruption began on March 20 with a lava flow on the eastern flank of the Eyjafjallajökull volcano, according to the Institute of Earth Sciences at the University of Iceland. After a lull, it resumed early on April 14, directly under the icecap that covers most of the mountain.

To contact the reporters on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net; Steve Rothwell in London at srothwell@bloomberg.net.

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