Volcanic dust cost SAA R14m a day


The volcanic ash cloud that grounded Europe for five days cost state airline South African Airways (SAA) about R14 million a day in lost revenues. Some of this revenue may be recovered from people who still make their planned trip, albeit at a later date, but some, especially for business travel, has been lost for good, the airline says.

SAA’s newly appointed chief executive, Siza Mzimela, says the full extent of the damage will only be known once normalcy returns, Business Report newspaper adds. Extra flights have been laid on to deal with stranded passengers but some could get home as late as next month.

Angry would-be travellers blocked the international departures hall at OR Tambo International Airport today after being told they have to wait until early May to leave SA. Only a limited number of travellers scheduled to leave on flights to Europe will be able to fly out of the country today, Eyewitness News reports. Up to 100 000 commercial flights were grounded this last week because of ash clouds containing glass and other abrasives generated by a volcano in Iceland from last Thursday. The broadcaster says travellers refused to move until officials gave them guarantees of exactly when they would be able to fly back home.

The International Air Transport Association (IATA) now estimates that an Icelandic volcano cost airlines more than $1.7 billion in lost revenue to Tuesday—six days after its initial eruption. For a three-day period (April 17-19), when disruptions were greatest, lost revenues reached $400 million per day. “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.
“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 Bisignani.

But the larger role is for governments. Bisignani made four specific requests for regulatory relief:

Relax 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.

Address 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,” says 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.”

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,” added 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.

Airline manufacturer Airbus as also welcomed a united industry position on acceptable tolerance levels for flight operations in ash-contaminated airspace. “Over the last few days, Airbus initiated discussions among the aviation community and provided full technical assistance to the authorities and its airline customers,” the company said in a statement. “These industry-wide discussions lead to a common evaluation of data and an agreed definition of acceptable tolerance levels. This enabled aviation authorities across Europe to assess the situation, reopen airspace and allow flights in safe conditions.
“It was key for Airbus to find a common solution among the industry and propose a technical assessment in order to ensure business continuity for airline customers, their passengers and Airbus’ own operations. Thanks to the industry’s collective effort, a safe way to resume flights as soon as possible was found.
“On Monday, an A380 flight test aircraft flew for three hours 50 minutes within French airspace and the A340-600 flight test aircraft for five hours in French and German airspace as per normal procedures. The flight test crew did not notice anything abnormal and the post flight inspection showed no irregularities. In conjunction with all engine manufacturers, Airbus analysed the data available from these tests, as well as other tests performed by airlines in the European airspace and previous volcanic ash encounters involving Airbus and other manufacturers’ products. Other relevant knowledge of engine and aircraft operations in similar environments was also taken into account.”

Airbus, engine suppliers, other aircraft manufacturers and a number of airline customers will continue to work together to conduct further tests and closely monitor a significant number of aircraft in operation, the company says. Industry, research institutions and authorities together should review the lessons learnt and develop a sustainable way forward.