Cost Airlines $1.7 Billion
Measures to Mitigate Impact-
Berlin - The International Air Transport Association (IATA)
estimated that the Icelandic volcano crisis cost airlines more than $1.7
billion in lost revenue through Tuesday—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.
“Lost revenues now total more than $1.7 billion for
airlines alone. 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.
IATA noted there are some cost savings related to the
flight groundings. For example, the fuel bill is $110 million a day less
compared to normal. But airlines face added costs including from
passenger care. “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. Europe’s carriers were already expected to
lose $2.2 billion this year—the largest in the industry,” said Bisignani.
Mitigating the Financial Impact
“As we are counting the costs of the crisis we must also look for ways to
mitigate the impact. Some of our airport partners are setting industry
best practice. London Heathrow and Dubai are waiving parking fees and not
charging for repositioning flights. Others airports must follow,” said
But the larger role is for governments. Bisignani made
four specific requests for regulatory relief:
Airport Slot Rules: IATA urged that rules on
take-off and landing slot allocation (use it or lose it) be relaxed
to reflect the extra-ordinary nature of the crisis.
- Lift Restrictions
on Night Flights: IATA urged governments to relax
bans on night flights so carriers can take every opportunity to get
stranded passengers back home as soon as possible.
Unfair Passenger Care Regulations: “This
crisis is an act of god—completely beyond the control of airlines.
Insurers certainly see it this way. But Europe’s passenger rights
regulations take no consideration of this. These regulations provide
no relief for extraordinary situations and still hold airlines
responsible to pay for hotels, meals and telephones. The regulations
were never meant for such extra-ordinary situations. It is urgent
that the European Commission finds a way to ease this unfair
burden,” said Bisignani.
Bisignani also urged governments to examine ways for
governments to compensate airlines for lost revenues. Following 9/11, the
US government provided $5 billion to compensate airlines for the costs of
grounding the fleet for three days. The European Commission also allowed
European states to provide similar assistance.
“I am the first one to say that this industry does not
want or need bailouts. But this crisis is not the result of running our
business badly. It is an extra-ordinary situation exaggerated with a poor
decision-making process by national governments. The airlines could not
do business normally. Governments should help carriers recover the
cost of this disruption,” said Bisignani.
Re-Opening Air Space
On Monday, the European Commission announced revised measures for handling
airspace closures, following widespread criticism of their methodology.
“Airspace was being closed based on theoretical models not
on facts. Test flights by our members showed that the models were wrong.
Our top priority is safety. Without compromising on safety, Europe needed
to find a way to make decisions based on facts and risk assessment, not
theories,” said Bisignani.
“The decision to categorize airspace based on risk was a
step in the right direction. Unfortunately, not all states are applying
this uniformly. It is an embarrassing situation for Europe, which after
decades of discussion, still does not have an effective Single European
Sky. The chaos and economic losses of the last week are a clarion call to
Europe’s political leaders that a Single European Sky is critical and
urgent,” said Bisignani.
Giovanni Bisignani's remarks
- IATA -
For more information, please contact:
Director Corporate Communications
Tel: +41 22 770 2967
Notes for Editors:
(International Air Transport Association) represents some 230
airlines comprising 93% of scheduled international air traffic.