An Oxford Economics study, commissioned by Airbus, puts the economic impact of the initial air travel shut for the week of April 15-21 due to the eruption of Iceland’s Eyjafjallajokull volcano at $4.7 billion in lost GDP. 

GDP Impact of Volcanic Ash Shutdown

The GDP impact goes up to $5 billion taking into consideration the subsequent sporadic cancellations and shutdowns upto May 24, 2010.

The highlights from the study (for the week of April 15-21, unless stated otherwise):-

- Global aviation sector losses = $2.6 billion
- Global loss in visitor spending at destinations = $1.6 billion
- Productivity losses from stranded workers = $490 million
- Global GDP impact = $5 billion as of May 24, 2010
- Total passengers impacted = 7 million

Outside of Europe, the Americas were the mostly badly affected, with a GDP impact of $957 million. Nearly 462,000 passengers were impacted in the Americas, which cost the airlines a gross loss of $396 million and hit destinations to the tune of $378 million. 

Meanwhile, the IATA came out with traffic figures which show that global passenger demand dropped 2.4% in April. Giovanni Bisignani, IATA’s Director General and CEO, lamented that “The ash crisis knocked back the global recovery – impacting carriers in all regions. Last month, we were within 1% of pre-crisis [recession] traffic levels in 2008. In April, that was pushed back to 7%.”

But the worst might be yet to come. Icelandic President Ólafur Grímsson is warning European governments that another volcanic eruption is round the corner. This time, its Katla – another volcano bigger than Eyjafjallajokull – which is rumbling and sending signs of an imminent eruption. 

Europe and the global aviation sector now need to learn how to keep planes in the air even in the presence of an ash cloud and more volcanic eruptions, because based on their historic record, Eyjafjallajokull and Katla erupt in tandem, and it’s going to continue on and off for a couple of years.

Oxford Economics study summary - Download (pdf)

Related posts:-
Ash Thursday Knocks the Wind Out of European Aviation
Winners & Losers of the Icelandic Volcano Shutdown