Volcano Could Build Into Major Business Problem (NPR)

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Volcano Could Build Into Major Business Problem by The Associated Press

The eruption of a volcano in the tiny, isolated island nation of Iceland is

threatening to turn into a major headache for businesses across Europe and

around the world as a spreading ash cloud closes more European airports.

Airlines are already counting the cost of grounded planes, and there are growing

fears about the transportation of food supplies and other essential goods should

the flight disruptions persist for several days -- or longer.

But there were also some early winners from the unprecedented situation, with

rail, bus and ferry tour operators all quick to lay on extra services for

stranded business and leisure travelers as hotel rooms filled up.

Airline shares took a hit as the Geneva-based International Air Transport

Association estimated that the disruption is costing the industry some $200

million a day in revenues. IATA added its forecast was " conservative " and costs

will mount further as carriers reroute aircraft and care for stranded

passengers.

Eurocontrol, the European air traffic agency, said some 17,000 flights were

canceled on Friday, more than half the 28,000 that usually operate. Delays and

cancelations will continue on Saturday as the ash cloud from the eruption of the

volcano beneath Iceland's Eyjafjallajokull (ay-yah-FYAH'-plah-yer-kuh-duhl)

glacier moves south and east. The flight ban was imposed because of concerns

about pilot visibility and jet engine failure from the ash.

Steel, global chairman for transport and infrastructure at professional

services company KPMG, said that the biggest losses would come from

trans-Atlantic business traffic, with the impact on economy class revenues muted

by the fact that people would likely change their bookings to a later date.

" This is yet another dramatic and costly event for the global aviation industry

which will have a significant impact on annual revenues, " Steel said, adding

that the development reinforced the case for consolidation of the international

airline sector.

" Truly global airlines will be much better placed to deal with the financial

fallout from these types of events, " he said.

British Airways shares dropped 1.1 percent, German flag carrier Lufthansa lost

2.1 percent and Air France-KLM slipped 1.7 percent.

There were few early reports of major impacts on exports and imports, but

analysts stressed that the stakes would rise each day of the flight ban.

" Some businesses will be affected by the inability for freight to get in and out

of the country, " said Archer, chief economist at IHS Global Insight in

London. " As long as the disruption is not too long, this should not be a major

problem. The main problem will be for goods that are perishable. "

The pharmaceutical industry is particularly reliant on air freight because of

the high value and low weight of their products.

The Italian farmer's association said that it may become an issue to import out

of season goods from other areas, even though Italian airports are still open as

shipments often come via other major European cities.

Chiara Coffele, export manager of the family Coffele winery in Soave, Italy, was

unsure whether she would make a wine festival and other business appointments in

Norway in the coming days after her flight from Milan was canceled on Thursday.

Coffele travels two or three times a year to Norway, where the family sells 15

percent of the 510,000 bottles of wine it produces annually. The three-day

Stavanger wine festival is usually a key network event.

While others are missing some holiday work because of the flight cancelations,

" I get a little less work, " Coffele said.

A spokesman for the flower market in Berlin, which sells flowers that have been

imported from all over the world, said there had not been any problems with the

delivery on Friday morning and he was not aware of logistical problems for

Saturday's flower trade. Several sushi restaurants said they get fresh fish on

Thursday and had no deliveries until Monday.

As Europe's airports emptied, travelers instead crowded train stations, bus

depots and rental car offices.

The high-speed Eurostar rail service linking Britain and continental Europe

reported thousands of new bookings for the next few days.

National railway operator Deutsche Bahn said it deployed all available trains

and asked personnel to work extra shifts on the weekend. Nonetheless, it warned

of overcrowded trains and long lines at booking counters. Norway's NSB railway

company put extra trains on routes from Oslo to major Norwegian cities and the

Swedish capital, Stockholm.

Germany's Sixt car rental reported long lines at German branches.

" There's a rush on our rental offices, " said spokesman Elsner. " We're

trying to mobilize everything we can and try to offer an additional 2,000 cars

across Europe in cooperation with our partners to make sure travelers can get

back home on the weekend. "

In Britain, Network Rail canceled the bulk of engineering work that was planned

for the next few days and also added extra services.

At the Jumbo Hostel -- a Boeing 747 remodeled into a 27-room hotel just outside

the Arlanda airport in Stockholm -- rooms were filling up fast.

" I think we'll be full tonight, " said manager Dios. " It's this sort of

thing that we're here for. There is no place to go at the airport. "

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