Business counts cost of volcanic disruption
The Iceland volcano is threatening to turn into a major headache for businesses across Europe.
Airlines are already counting the cost of grounded planes, and there are growing fears about the transportation of food supplies and other essential goods should the disruptions persist for several days – or longer.
Airline shares took a hit as analysts estimated that the major carriers would be losing some tens of millions of pounds each day.
All of Europe’s three biggest airports – London’s Heathrow, Paris-Charles de Gaulle and Frankfurt in Germany – were closed today because of concerns about pilot visibility and jet engine failure from the ash.
Ashley Steel, global chairman for transport and infrastructure at professional services company KPMG, said that the biggest losses would come from trans-Atlantic business traffic, with the impact on economy class revenues muted by the fact that people would probably change their bookings to a later date.
“This is yet another dramatic and costly event for the global aviation industry which will have a significant impact on annual revenues,” he said, adding that the development reinforced the case for consolidation of the international airline sector.
“Truly global airlines will be much better placed to deal with the financial fallout from these types of events,” he said.
British Airways shares dropped 1.1%, German flag carrier Lufthansa lost 2.1% and Air France-KLM slipped 1.7%.
There were few early reports of major impacts on exports and imports, but analysts stressed that the stakes would rise each day of the flight ban.
“Some businesses will be affected by the inability for freight to get in and out of the country,” said Howard Archer, chief economist at IHS Global Insight in London. “As long as the disruption is not too long, this should not be a major problem. The main problem will be for goods that are perishable.”
The pharmaceutical industry is particularly reliant on air freight because of the high value and low weight of their products.
The Italian farmer’s association said that it may become an issue to import out of season goods from other areas, even though Italian airports are still open as shipments often come via other major European cities.
As Europe’s airports emptied, travellers instead crowded train stations, bus depots and rental car offices.
The high-speed Eurostar rail service reported thousands of new bookings for the next few days.
German railway operator Deutsche Ban said it deployed all available trains and asked staff to work extra shifts at the weekend. But it warned of overcrowded trains and long lines at booking counters.
Norway’s NSF railway company put extra trains on routes from Oslo to major Norwegian cities and the Swedish capital, Stockholm.
Germany’s Sit car rental reported long queues at German branches.
“There’s a rush on our rental offices,” said a spokesman. “We’re trying to mobilise everything we can and try to offer an additional 2,000 cars across Europe in cooperation with our partners to make sure travellers can get back home on the weekend.”
