Volcanic ash clouds hit Asian business

Despite the partial reopening of European air space, many Asian carriers remained grounded for the sixth consecutive day due to huge volcanic ash clouds from Iceland. The cancellation of flights has not only left millions of people stranded, but also cast a cloud on Asian business.

Binit Somaia from the Centre for Asia Pacific Aviation in Sydney says the impact is huge. "For example in India, you have the start of the long summer school holidays, and a lot of people were looking forward to start departing for Europe so the impact is there. Australia has a very high volume of traffic to Europe. Likewise the countries that have airlines that act as major hub carriers such as Cathay Pacific from Hong Kong, or Singapore Airlines, Gulf carriers such as Ethihad and Emirates are also affected."

Exports and cargo affected

Even though the Asian carriers have been able to continue their operation in the non European sectors as usual, they are expected to lose millions of dollars in revenue per day due to the disruption of flights in Europe.

Asian exports and air cargo services have also been hit hard. Asian carriers transport a large percentage of cargo that includes mobile phones, high tech electronics and textiles.

In South Korea, a trade association estimated the country will post 112 million dollars (around 83 million Euros) in lost exports caused by the ash cloud.

Thousands of factories in China's Guangdong province have also seen air freight delayed, mainly watches, jewellery and clothing.

In Japan, the carmaker Nissan said it was being forced to suspend some vehicle production because of a shortage of parts that were supposed to come from Ireland.

Impact on financial recovery

Experts fear the disruption of flights could slow down the regional recovery from the recent global economic slump.

"This has come at a particularly bad time," says Somaia. "After the financial crisis we saw last year, the market has just started to see some signs of recovery. Passenger numbers were increasing. Most carriers were looking forward to a much more buoyant market for the coming summer. This has happened right at the start of this period."

But he maintains that the implications on the Asian airlines as such will be minor:

"They are relatively strong carriers compared to Europe and America and a lot of the carriers in the region do have either full or partial ownership with the government. Therefore they will see some support in this period. But it will not be easy and certainly some smaller carriers may expect some challenges to go ahead."

Meanwhile weather experts in Europe say they expect to see a change in wind conditions and rain over the weekend, which should help clear the ash cloud, sparking hopes that air traffic will soon fully resume.

Author: Disha Uppal

Editor: Sarah Berning