The European Union is prepared to authorise exceptional financial aid to airlines hit by the closure of air space caused by the volcanic ash cloud, the EU Commission said today.
The EU competition watchdog is ready to consider adopting the framework it adopted after the September 11, 2001 attacks in the US, when exceptional aid was allowed to companies affected, the EU Competition Commissioner Joaquin Almunia said.
Read the latest updates on the disruption here
The post-9/11 rules allowed for 'state aid given because of exceptional events', Almunia recalled, while stressing that European governments should be able to demonstrate the need for the aid and the fact that it would not be discriminatory as regards other companies or sectors.
His spokeswoman said the possibility for the aid was permitted under EU law to compensate for losses caused by natural catastrophes or exceptional events.
That would allow European governments to help compensate companies for losses due to the volcanic ash cloud which is keeping planes on the ground through much of Europe, spokeswoman Amelia Torres underlined.
Meanwhile, shares in the two Irish airlines were sharply lower this evening, though off earlier lows. Aer Lingus dropped 4% to 72 cent and Ryanair lost 3.1% to €3.77.
It is estimated that the two airlines are losing over €7m a day as the volcanic ash cloud continues to cause travel chaos across Europe. About €28m has been shaved off the combine sales of Aer Lingus and Ryanair since the volcano erupted last week.
British Airways said the ash cloud is costing the group £15-20m sterling a day. Its shares closed down 1.4% in London this afternoon.
Air France has puts cost of disruption at €35m a day, while Scandinavian airline SAS said it had lost up to €29m in just four days of grounded flights.
The Irish Exporters' Association has said that €95m worth of exports were being held up every day by the continuing air restrictions. Chief executive John Whelan said exporters were hiring trucks to take goods to southern Europe where airports are still open.
However, he added that valuable exports to the US and Asia were being seriously disrupted.
IATA not happy with response to ash crisis
The International Air Transport Association (IATA) said today that European governments' response to the volcano crisis was inadequate and estimated its economic impact on airlines to be greater than the 2001 September 11 attacks in the US.
Giovanni Bisignani, head of the IATA airline industry body, estimated airline revenue losses were now reaching $250m a day, up from an earlier estimate of $200m on Friday.
Bisignani called for urgent action to safely re-open airspace and called for a meeting of the International Civil Aviation Organisation, the United Nations aviation body.
'I would say that in a couple of weeks this will be a very embarrassing story for Europe,' Bisignani told a news briefing in Paris.
'It took five days to organise a conference call with transport ministers with an emergency situation all over Europe and now expanding all over the world,' he added.
Most of Europe's airspace has been closed since Thursday after a huge ash cloud from an Icelandic volcano spread out, stranding millions of business passengers and holidaymakers and paralysing freight and businesses worldwide.
'This volcano has crippled the aviation sector, firstly in Europe and is now having worldwide implications. The scale of the economic impact on aviation is now greater than 9/11 when US airspace was closed for three days,' Bisignani said.
But he added that the US attacks had triggered a loss of confidence in air travel that was not present today. He also predicted that recovery from the current crisis would be quicker once the clouds dispersed.
'We have predicted at least $200m a day in lost revenue that is a conservative number. Today, that is more like $250m. On top of this you have the additional cost for re-routing and compensation,' he said.
Around 30% of passenger flights scheduled in Europe today are expected to get off the ground, the intergovernmental Eurocontrol service said.
The flights set to go ahead, an estimated 8,000-9,000 compared to the normal 28,000, can get up in the air in the southern parts of the continent where the cloud of ash from an Icelandic volcano have not been blown by the prevailing winds.
The areas still open to civil aviation include Portugal, Spain, parts of Italy and France, the Balkan area, Bulgaria, Greece and Turkey, as well as parts of northern Europe (Norway and parts of Sweden), according to the Brussels-based Eurocontrol.
The Dutch airline KLM, which has flown several test flights, said most European airspace was safe despite the plume of ash and dispatched two commercial freight flights to Asia yesterday.
