PARIS – Airline losses from the volcanic ash cloud surpassed $1 billion Monday, and the industry demanded compensation from the European Union as officials agreed to let flights resume on a limited basis.

Airlines are losing as much as $300 million per day, with European companies like British Airways suffering the most. An umbrella group for the airline industry criticized European leaders’ handling of the disruption, which has grounded thousands of flights to and from Europe for the past five days.

“It’s embarrassing, and a European mess,” said Giovanni Bisignani, chief executive of the International Air Transport Association. The group complained that it saw “no leadership” from government officials.

“It took five days to organize a conference call with the ministers of transport, and we are losing $200 million per day (and) 750,000 passengers are stranded all over. Does it make sense?” Bisignani said.

The disruptions caused by the ash cloud happened just as airlines were seeing demand pick up, particularly in the more lucrative business-travel segment. Last year, the recession suppressed both leisure and business travel, causing the industry to lose an estimated $9.4 billion, according to the IATA.

British Airways said airlines have asked the EU for compensation for the closure of airspace, which began Wednesday. BA’s London hub was among the first airports shut down.

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“This is an unprecedented situation that is having a huge impact on customers and airlines alike,” said BA Chief Executive Willie Walsh.

The airline industry has racked up $50 billion in losses over the past decade. The 9/11 attacks, epidemics of SARS and bird flu, increased security requirements, and the economic crisis have all been cited as causes for decreased revenues.

After the 2001 terrorist attacks, Congress gave U.S. airlines $15 billion in aid and loan guarantees, which may provide an example for European governments dealing with the volcano.

Pierre-Henri Gourgeon, the No. 2 executive at Air France-KLM, said his company is losing $47 million a day even as test flights indicated the routes were safe to fly.

“On all these flights, there hasn’t been any reported problem upon arrival,” Gourgeon said. “There isn’t a real risk. . . . The precautions that have been taken are certainly too restrictive.”

European Union transport ministers reached a deal Monday to divide northern European skies into three areas: a “no-fly” zone immediately over the ash cloud; a caution zone “with some contamination” where planes can fly subject to checks for engine damage; and an open-skies zone.

Starting this morning, “we should see progressively more planes start to fly,” EU Transport Commissioner Siim Kallas said.

 


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