World Business

Volcanic ash cloud costs EU airlines $3.3b

(Xinhua)
Updated: 2010-04-28 10:13

BRUSSELS: The ash cloud resulting from a volcanic eruption has caused economic damage of up to 2.5 billion euros ($3.3 billion) to the European airline industry, the European Commission said on Tuesday.

"We have taken all assessments and valuations of costs from all the different stakeholders and we are working with a number between 1.5 and 2.5 billion euros," European Union (EU) transport commissioner Siim Kallas told reporters.

The EU has been hit last week by an unprecedented crisis with the closure of airspace due to the volcanic eruption in Iceland, leading to more than 100,000 canceled flights and more than 10 million passengers unable to travel. Flights have been gradually returning to normal since Wednesday.

In response to the crisis, the commission launched an assessment of the economic consequences of the volcanic ash cloud on the airline industry last week, whose results were released Tuesday.

Kallas said at the very beginning of the crisis, the first priority for the commission was to facilitate the opening up of more airspace to get stranded passengers home, but as the situation is getting back to normal the focus should shift to relief measures for the air industry.

The commission suggested that EU member states could use state aid to help their airlines, in addition to support measures which do not constitute state aid, notably loans and guarantees granted at market conditions.

But the EU's executive arm said the state aid must be granted on the basis of uniform criteria established at European level and cannot be used to allow unfair assistance to companies which is not directly related to the crisis.

Besides short-term support, the commission also called for medium-term structural measures.

The volcanic ash crisis exposed the EU's lack of coordinated response due to its fragmented air traffic system along national borders.

The commission is pushing for a fast-track reform under the EU's Single Sky package, which aims at redesigning the European sky according to traffic flows rather than national borders. In particular the Single Sky package would put in place a single European system for air traffic, which would coordinate the work of 27 national air traffic controllers.

"If the network management function had been designated prior to the crisis, the situation would have been quite different," the commission said.

EU transport ministers were scheduled to hold an emergency meeting on May 4 to discuss the economic consequences of the volcanic ash crisis and the commission's proposals.