The European Commission yesterday (27 April) proposed a number of measures to address the ash cloud crisis, including temporary derogations for night flights and deferral of charge payments for airlines. Brussels gave its green light to state aid for the air sector, whose crisis bill is estimated to cost between €1.5 and 2.5 billion.
Restoring normal air traffic and bringing stranded passengers and backlogs of freight to their final destinations remains the immediate priority of the European Union.
Brussels estimates that the ash cloud crisis led to over 100,000 cancelled flights and more than 10 million passengers unable to travel.
To address the prolonged emergency, the European Commission is promoting night flights as a temporary measure. Millions of European households are likely to have less quiet nights for a few weeks while the measure is implemented.
"Member states should be able to provide temporary derogations from scheduling restrictions– such as night-flying restrictions – to bring stranded passengers home as quickly as possible and get freight deliveries back to normal," EU Transport Commissioner Siim Kallas suggested yesterday.
The cost of the eruption
The latest figure put forward by the European Commission regarding the possible cost of the crisis for the air sector is between €1.5 and 2.5 billion, Commissioner Kallas told journalists.
Stressing that this is still a "preliminary" figure, he said the estimate does not exclusively concern airlines but the sector as a whole. "This figure includes other possible losses," Kallas underlined.
His spokesperson explained that the Commission had reached this preliminary conclusion using data provided by airlines, airports, ground-handling services and tour operators.
Financial support to airlines
To provide immediate financial relief for the hardest-hit airlines, Kallas proposed to defer "for a limited period" the payment of en-route charges, which airlines must pay to the national authorities in whose airspace they fly.
These fees represent a substantial cost and often force airlines to choose longer routes to avoid the most expensive bits of airspace.
This should help airlines with short-term cash flow problems, explained the European Commission.
In the longer term, Brussels confirmed its support for targeted state aid to support the recovery of the sector. However, the Commission made clear that such extraordinary support could only be granted to companies "directly" affected by the crisis.
In the coming weeks Brussels will publish a set of guidelines on how to provide state aid to eligible airlines in exceptional circumstances while making sure that the assistance is not unfair.
However, so far no member state has filed any notification of state-aid measures related to the ash cloud crisis, according to an EU official.
The Commission also stressed that member states can use other financial instruments to help affected air carriers, such as loans and guarantees granted at market conditions.
Overall reform of EU transport sector
EU transport ministers will meet on 4 May to discuss the situation and to evaluate the Commission's proposals.
They will also find on their table a plan for a single European regulator for the European sky, to replace national authorities as proposed by the European Commission.
"Stronger European coordination will not solve every problem. But faced with such a pan-European crisis, it would have enabled a much more agile response," Kallas said, urging member states to fast-forward to 2010 the entry into force of over-arching reform of EU air transport regulations, known as the 'Single Sky' package and originally expected in 2012 (EurActiv 26/04/10).
Ministers will also discuss Commission proposals for pan-European crisis planning for transport, which provide for the immediate and temporary replacement of a stranded means of transport with another. Trains, buses or boats, for example, could have been used much more effectively during the volcano crisis to alleviate passengers' inconveniences.
Global rules for airlines
The EU will also propose new global rules for airlines and air-traffic controllers to deal with volcanic eruptions. The proposal will be presented in September to a general meeting of the International Civil Aviation Organisation (ICAO), an arm of the United Nations.
ICAO's current rules, developed after eruptions in the 1980s, tell carriers to completely avoid clouds of volcanic dust or ash. They were the main reason why European governments completely closed their airspace.
Representatives of European airlines and airports, who criticised the EU's handling of the crisis last week, welcomed the European Commission's proposals.
Ulrich Schulte-Strathaus, secretary-general of the Association of European Airlines, applauded the proposal. He said the task force led by Commissioner Kallas had in "a remarkably short time-frame" come up with sound analysis of how the impact of the grounding should be handled and how a similar crisis could be avoided in the future.
Schulte-Strathaus said EU airlines would not seek state aid as a result of the crisis, but should not be left completely responsible for covering the financial consequences of governments' decisions to close their airspace.
Olivier Jankovec, director-general of the Airports Council International Europe, said the Commission's proposal "could constitute a feasible European aviation-relief plan" and praised its swift preparation.
At the onset of the crisis, the head of the International Air Travel Association, Giovanni Bisignani, suggested that EU governments were directly responsible for the financial losses because they closed airspace unnecessarily.
John Hanlon, a spokesman for the European Low Fares Airline Association, welcomed the Commission's acceptance of the industry's case for compensation. But he expressed concern that the measures might allow governments to offer loans or loan guarantees to traditional carriers that were struggling even before the volcano erupted.
"We are totally for compensation, but it has to be specifically linked to verifiable costs incurred," Hanlon said. "Loans and guarantees would appear to be the wrong mechanism for that."
Irish Transport Minister Noel Dempsey said his government would not be compensating airlines hit financially by the volcanic ash shut-down of European airspace.
Dempsey said airlines had not yet asked for compensation but in any case, the government would not be able to pay it. "We don't have the kind of finances available and ready for that."
The eruption of a volcano in Iceland provoked mass disruption on Thursday 15 April as a cloud of ash brought air traffic in Northern Europe to a standstill (EurActiv 15/04/10).
Flights slowly started to resume on Tuesday 20 April, under a deal agreed by the European Union to gradually free up airspace (EurActiv 20/04/10).
Air traffic levels in Europe have been back to normal since Thursday, according to Eurocontrol, the agency responsible for coordinating European air traffic management. According to the agency, more than 100,000 flights were cancelled from 15-22 April.
The economic fallout from the crisis is still uncertain, and will be the main topic on the agenda of a meeting of EU transport ministers on 4 May.
- 4 May 2010: Extraordinary EU Transport Council.
- European Commission:European Commission – Memo on volcanic ash crisis – 27 April 2010
- European Commission:European Commission – Kallas’ speech on economic impact of ash cloud – 27 April 2010