April 19th, 2010
05:00 PM GMT
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The cloud of ash from an Iceland volcano is casting a shadow over the delicate economic recovery in Europe as the cancellation of flights in key markets entered its fifth day costing the airline industry hundreds of millions of dollars in lost revenue.

Should the airlines be bailed out?
Should the airlines be bailed out?

By the end of the day on Sunday, a total of 63,000 flights had been canceled in the four days since ash from a volcano under the Eyjafjallajokull glacier in Iceland closed the airspace of a large swath of Europe, according to air traffic authority Eurocontrol.

One industry group said the air travel and freight disruptions are costing airlines at least $200 million a day.

"This crisis is costing airlines at least $200 million a day in lost revenues and the European economy is suffering billions of dollars in lost business," said Giovanni Bisignani, director general and CEO of the International Air Transport Association.

He told CNN that if flight restrictions continue, some small and medium-sized airlines could be put in jeopardy.

Even airlines based far from the ash face a financial knock-on effect: Thai Airways, based in Bangkok, estimates the cloud is costing the airline $3 million a day and has stranded 6,000 of its passengers.

On Monday, the British Airlines Pilot Association called on the UK government to rescue airlines in a banking-style bailout because of the severity of the disruptions.

British Airways also said in a statement that "European airlines have asked the EU and national governments for financial compensation for the closure of airspace."

We want to know what you think.

Should the airlines be bailed out? Should airlines receive financial compensation because of the volcanic ash cloud?

Filed under: BusinessQuest Means Business


soundoff (19 Responses)
  1. Alexander Wilhelmsen

    Where does it stop? Which sector of industry won't get special treatment?

    I don't see how sovereign economies can sustain bailing out every sector of industry every time something unforeseen happens. The idea of "too big to fail" doesn't quite apply to the airline industry either, so no. The line needs to be drawn somewhere, and preferbly soon before it's too late.

    April 19, 2010 at 5:07 pm |
  2. Moustafa Maher

    As we can see here that it is just $200 M "lost revenues" which means that they didn't actually pay any money out of their pockets yet, except few, for administrative fees. I think that this problem should not take more than it's size. However, this is also a loss in the revenues for Tourism income to some Med. countries like Egypt , Spain, Syria and Israel. But still this is a temp problem and should not be shown more than it's actual size.

    Me as a business owner, I was expecting parcels of samples from European manufacturers but I didn't receive them yet because of this ash that caused delay of DHL ,TNT and UPS express services. But still I can handle it with my clients. And this is exactly why I wonder, how come huge companies can't handle their clients like I did as a Mid. size business owner !!

    This is my opinion and it could be wrong. And I'd be happy if you tell me that I'm wrong.

    Cheers,

    Moustafa Maher.

    April 19, 2010 at 5:21 pm |
  3. ofentse ntshegang

    The human species still disregard the butterfly effect.
    All major establishments that ought to go, will go eventually, if not from within, from outside forces. Those establishments that do not give greater value for the money they charge for their services are at the highest risk of catastrophic failure .
    Just as Warren Buffet invested $5bn in Goldman Sachs some other great people out there could use a few major airlines at a cheaper price for the greater good of the world.

    Those that have failed( even the rescued) failed for a good reason, so let the real winners take them over for the greatest good.

    April 19, 2010 at 5:25 pm |
  4. Theresa

    Nope.

    April 19, 2010 at 5:52 pm |
  5. Jad

    I am seriously starting to wonder about the efficiency of capitalism, because all i see is socialist like government interventions...

    April 19, 2010 at 6:06 pm |
  6. Dolan

    No, these are estimated losses. When the public is run over by tornados, floods, ice storms we have to bite the bullet and make do. Yes, the government offers us loans but at a cost. Nothing is free. I agree with Jad, the world is moving towards a socialistic society and it will be the downfall of all democratic nations. I am sure that none of the execs at the airlines will miss a meal or a bonus.

    April 19, 2010 at 7:39 pm |
  7. Leslie

    No, they should not recieve help. things happen this is the force of Mother nature! it's not like they are having to pay people who are not working right now, so obviously their estimate is probably on the high side and they should just deal with it.

    April 19, 2010 at 8:19 pm |
  8. justice

    COME ON, are they serious, are they F... serious, that is our tax money WE worked har for that money or did anybody just graved it from a tree and say "oh here is my tax money" come on, they shouldnt do that, why is it, that the goverment can do anything they want and we just sit and complain but do nothing about it, we should be treated this way, that money should go to education, health care, roads, not airlines they have alot of money, just because they are going to loose a bit we are supposed to bail theme out, people that lost their houses on the crisis WE should bail theme out not, jp morgan and fannny mae and now airlines.

    April 19, 2010 at 10:04 pm |
  9. zacatecas_guy (twitter)

    i can use that hundreds of millions of dollars for buy tons of pepsi , quest !!! , i know you understand me ! bye take care you are super cool !

    April 19, 2010 at 11:09 pm |
  10. Chrysotheras

    Funny sort of capitalist/market economy these people (IATA) practise....
    ...they keep the profits but want to share losses with taxpayers!!..
    Even a 10 year old could manage that!!!

    PS.I'd love to hear what Rep. Ron Paul would think of this...

    April 19, 2010 at 11:28 pm |
  11. steve

    Who will bail out all the people strandid and all the business that are going to be effected. NO WAY!!

    April 19, 2010 at 11:46 pm |
  12. Ben Sands

    Nope – no bail out.
    Also no compensation for travelers for their hotel etc costs – this ain't companies fault.

    April 20, 2010 at 6:51 am |
  13. Henrik

    Im stunned by the amount of ignorance among the few comments to this story.

    the comment by "Moustafa Maher":
    $200 in lost revenues. You claim that they dont pay any money out of their pocket. Do you have ANY idea how expensive it is to have all your employees just sitting standby at home, or at the workingplace doing NOTHING but still being fully payed? We dont have American conditions all over europe(Not in Denmark). We use unions.

    Secondly a EU-Directive forces the Airlines to cover the expenses for stranded passengers (Hotel and new transport home), this often means sending busses, which are in HIGH demand and the price goes up with demand.

    Last but not least, the Airline business is already under extreme pressure, many companies have been expected to go broke months ago. If the volcano cloud should force airlines to go broke, the european way is to help. We like our infrastructure, we like sustaining workplaces, we dont like unemployment, we like sustaining the competition of a market with many players. As consumers it lowers the price, at workers it creates work.

    Dont speak of something you know nothing about.

    April 20, 2010 at 7:22 am |
  14. shatly hassam

    i think they should be bailed out since it was a natural disaster which was fron God

    April 20, 2010 at 8:59 am |
  15. Gregory K

    Yes they should .
    By IMF !..... taking all the measures demanded .

    April 20, 2010 at 12:56 pm |
  16. Moustafa Maher

    Thanks Henrik for your awesome comment and I appreciate not snapping next time. And as I recall , I said "This is my opinion and it could be wrong " , and I also thinking of it "Business Wise" and I totally agree with " Ben Sands ", Plus you are thinking from a Danish prospective which is unfair for the rest of the EU countries that were almost bankrupt. Let's make Big business societies bare some responsibility , not always the government, this is the capitalism responsibility. Let's pour the money inside a better pool and investment acceleration and create new jobs and business opportunities for people. We don't need 3rd world war.

    Cheers and love you All.

    April 20, 2010 at 4:15 pm |
  17. Connie Krum

    Are you kidding me! My SON is stranded there with no way home. I could care less about the darn airlines and money. If my son had "oil" in his viens maybe the United States would give a darn. (For lack of a stronger word)...Thats the problem with this world. It's always money over people..but America can bail out other countries and help Tsunami, earthquacke, and flood victims around the world. My son is scheduled to be interviewed on your CNN show at 2:30 P.M today.(Mike Krum).. I'm SURE no one will answer a mothers letter to bring her son home. I don't have that much money to warrant such an action. Sincerely, A very upset and angry mother. Connie T. Krum

    April 20, 2010 at 5:53 pm |
  18. Brand & Logo design

    I don’t think that they should pay money. Because think only one time deeply that it’s a natural volcano. So it’s not possible.

    April 21, 2010 at 10:58 am |
  19. Miguel Hagenfeldt

    Made a quick review of the comments. It's seems general opinion that bail out is unacceptable. It is public money, thus not for private financing/compensation.

    I totally agree, despite not agreeing with some details of these comments. In a situation of natural disaster, I see as European Comission (or each country) responsibility to provide means for safety and evacuation (as e.g. UK did with military naval support). A state of emergency should have been declared. Our taxes are intended to cover these situations too! (btw, I did not suffer from this phenomena).

    In summary:
    - airlines should not be bailed out
    - travellers with insurance should use it to cover expenses
    - governments should help their citizens to get back home

    Everyone loses, indeed, but it's fair to all. Mother Nature gives us these surprises. But life on Earth wouldn't exist without volcanoes either ;-)

    Good luck to all returning home!

    Cheers,
    Miguel Hagenfeldt

    April 25, 2010 at 11:36 am |

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