Airlines Ask European Governments For Compensation (RYAAY)

The European airline industry has claimed monetary compensation from European governments, blaming them for overreacting to the volcanic ash cloud situation as European airlines and airports restarted regular flights from Wednesday. The Financial Times reports that after U.K. reopened its airspace on Tuesday night, British Airways (ADR) (OTC: BAIRY) said that it would start to operate all its long-haul flights departing from Heathrow and Gatwick airports. However, as its aircraft and crew are scattered, it will take some time before flight schedules return to normal.

Willie Walsh, Chief executive of British Airways, told BBC television, “To get back to normal levels of operation from an industry point of view will take weeks.” So, in order to clear the backlog, officials at Heathrow are seeking permission to allow overnight take-offs and landings. More than 10,000 British travelers remain stranded around the world. Adding to their woes, airline officials have said that it will take some more days or even weeks before normal services resume. Meanwhile, questions have been raised against European governments on why they took such a long time to give a green signal to airline industry when several test flights showed that flying was safe.

The International Air Transport Association (IATA) has estimated that ash cloud disruption has cost $1.71 billion to airlines, globally. BA has lost up to £20 million daily, TUI (representing Thomson and First Choice) £6 million, EasyJet £5 million, Ryanair (ADR) (NASDAQ: RYAAY) £5.2 million, Air France/ KLM£30.5 million, Emirates £6.5 million and Qantas £900,000.

Giovanni Bisignani, IATA director general and chief executive, said on Wednesday, “For an industry that lost $9.4bn last year and was forecast to lose a further $2.8bn in 2010, this crisis is devastating.” Bisignani believes that airlines will take three years to recover from these losses. He said, “It is an extraordinary situation, exaggerated with a poor decision-making process by national governments.” He has urged governments to find ways to compensate airlines.

IATA also said that airlines have saved around $110 million a day on costs such as fuel. In Britain, the foreign office has advised travelers to contact their airlines to figure out the easiest and quickest way to return back home. In Spain, the consular office organized 5 coaches from Madrid to Calais for 250 passengers but said that it may now be quicker to wait for a flight. The ash cloud disruption could also potentially dent the fragile recovery of Europe from the global recession.