BA demands compensation for Act of God

WITH Iceland’s erupting volcano now calming, the ash is clearing and aircraft flying. But it will still be weeks before the backlog of airfreight is cleared and longer still before the full impact of the crisis can be properly evaluated. That hasn’t stopped both the media and IATA from throwing about figures for estimated losses.

IATA calculates that airlines alone lost US$1.7 billion, for a three-day period lost revenues reached $400 million per day.

“The scale of the crisis eclipsed 9/11 when US airspace was closed for three days,” said Giovanni Bisignani, IATA’s director general and chief executive officer. “At the worst, the crisis impacted 29 per cent of global aviation.

“For an industry that lost $9.4 billion last year and was forecast to lose a further $2.8 billion in 2010, this crisis is devastating. It is hitting hardest where the carriers are in the most difficult financial situation. Europe’s carriers were already expected to lose $2.2 billion this year, the largest in the industry,” he added.

Struggling British Airways (BA) is the first of those to try and claw back some of that much-needed cash. Since this is an an Act of God, with regards to insurance, BA is instead demanding the European and UK governments should foot the compensation bill for banning flights through the ash cloud, instead of the volcano’s maker.

The UK carrier said it estimated its daily losses were £15 million to £20 million through the ban.

Chief executive officer, Willie Walsh, said: “To assist us with this situation, European airlines have asked the EU and national governments for financial compensation for the closure of airspace.

“There is a precedent for this to happen as compensation was paid after the closure of US airspace following the terrorist events of 9/11 and clearly the impact of the current situation is more considerable.”