Friday, April 23, 2010

Aviation After the Ashes

Now that the skies are apparently clearing of volcanic ash over most of northern and western Europe, it's time for the travel industry - especially the aviation wing - to figure out what to do if it happens again. Decisions made now will shape the holiday travel plans and business decisions of millions of travelers.

There's no predicting exactly how or when a volcano will erupt, but some of the devastation to travel that we've seen from the giant cloud of volcanic ash over the last 10 days could be mitigated if there is a good plan in place. Not having a clear, coordinated response to the aviation shutdowns posed by the ashes from Iceland cost the world's airlines an estimated $1.7 billion USD through Tuesday in lost revenue, according to the International Air Transport Association. Airports Council International reports that European airports, many of which reduced flights or shut down entirely during parts of the crisis, have lost an additional $250 million USD. When the bill is totalled, costs will probably soar somewhere north of $2 billion USD.

For airlines already reeling from a toxic combination of security scares, pandemic scares, global recession and volatile fuel prices, this is a serious blow. Giovanni Bisignani, the outspoken head of IATA, put his finger on it when he noted "For an industry that lost $9.4 billion USD last year and was forecast to lose a further $2.8 billion USD 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 USD this year - the largest in the industry.''

Bisignani, who has crusaded for years for a 'single European sky' - that is, a unified, continental air-traffic control system to replace the current 27 national systems in the European Union - was scathing in his criticism of European transport ministers. He noted it took three days for the ministers to get on the telephone for a conference call, by which time the crisis was well underway.

The lack of a coordinated response was noted by many.

In a feature story today Reuters news service comments "At one point, most Dutch and French airspace was open, Germany was open for visual take-off and landing only, and Britain was entirely closed. Tens of thousands of flights were cancelled and millions of people have had their travel disrupted over the last nine days.''

The notion of a single European sky gained some traction this morning when Spain's transport minister, Jose Blanco, told reporters that Eurocontrol, an agency that coordinates between national air-traffic control systems, should simply take over air-traffic control duties directly in the 27 EU states.

"This week has shown the need to carry out a joint reflection on improving Europe's mechanisms in reacting to situations like this,'' Reuters quoted Blanco as saying.

Bisignani and others are already calling for financial compensation to airlines charged with feeding and billeting stranded passengers in a crisis not of their making. Airports want to be compensated, too. Whether or not this happens, there is precedent for it: The United States set up a temporary loan program worth $5 billion USD for U.S. carriers after the terrorist attacks of Sept. 11, 2001, shut down North American airspace for three days. National governments are strapped for money right now, but the idea should not be dismissed out of hand.

If nothing else, the air travel shutdowns - a temporary boon to trains, hotels and car rental firms, certainly - showed just how dependent we are on air travel. The Sydney-based Centre for Asia Pacific Aviation sums it up well:

"Our whole global economy is built around fast movement of high-value products, from fresh produce through computer products, car parts, urgent medical supplies and even gold. More economically important even than that, entire supply chains rely on immediate delivery of ingredient products for manufacturing and retailing. Thus, there is a near-endless variety of affected companies and consumers as the blockage moves downstream.

"Then there is the world's largest industry, tourism. The disruption to tourism flows caused by the European grounding stretches far beyond the local impact, with all the potential tourists by air also being prevented from flying in either direction.''

In short, a fine mess. Let's not let it happen again.

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