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Iceland Volcano Costing Airlines Close to $200 Million a Day


Saturday, April 17th, 2010

While the volcano in Iceland is affecting airline flights across the world, Europe and Britain are bearing the brunt of it, as over 77 percent of flights in Europe have been cancelled, especially those scheduled in the central and northern nations of the region.

The Eyjafjallajökull volcano caused flights to be cancelled starting on April 14, and it's expected to continue on until April 22 at minimum.

On a regular Saturday, flights across Europe would number about 22,000, that has been cut to about 5,000. Germany won't be allowing any flights until 8 a.m. on Sunday Berlin time, while the U.K. will keep airports closed until 7 a.m. London time Sunday.

Accuweather stated, “The jet stream winds, which extend from 10,000 feet up to 40,000 feet, show no signs of change through Wednesday. Any ash plume that is released from the Eyjafjall volcano in Iceland will continue to threaten northern Europe and the British isles.”

The major concerns for flights is the engines and speed sensors of planes could be damaged from the ash plume released by the eruption, which has the consistency of glass in a dust form. That can melt and coagulate in a turbine which results in it stopping.

Concerns over the volcano aren't just related to short-term losses for the airlines though, as the last time it erupted in December 1821, it lasted all the way through January 1823, continually sending ash into the atmosphere.

That means it's possible it could continue to erupt over a period of time, consistently interrupting the airline industry, along with its revenue and profits.

Taking into account the struggle for airlines to maintain profitability, this is going to be a major blow to the industry, not just over the near term, but potentially the next year to year and a half if the past behavior of the volcano repeats itself this time around.



Article by Gary B

The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com



Tags: airline industry , airlines , iceland volcano

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