09.08.10

Oxford Economics' analysis of the recent airspace shutdown caused by the Icelandic volcano eruption finds that passengers, airlines and destinations were not the only losers. This report, commissioned by Airbus, estimates the far-reaching economic impacts of this disruption in air transportation.

Summary of the report:

• Global aviation sector losses in the first week tallied US$2.6 billion. However, when factoring in deferred business and leisure travel, the net aviation sector impact was US$2.2 billion.
• The visitor spending impact realised by destinations around the world is estimated at US$1.6 billion in lost revenues, primarily to hospitality sectors.
• Productivity losses stemming from stranded workers are estimated at US$490 million.
• International trade has also been severely disrupted as a result of the flight restrictions—particularly for perishable goods and for just-in-time production processes (e.g. high-value items which are also low-weight such as electronic parts and machine components).
• The total impact on global GDP caused by the first week’s disruption amounts to approximately US$4.7 billion.
• Since the massive airspace shutdown in the first week, another 5,000 flights have been sporadically cancelled. This would add an additional 5% to the first week impacts, bringing the total cost to US$5.0 billion lost GDP through 24 May, 2010.

Report:
Oxford Economics (May 2010) 'The Economic Impacts of Air Travel Restrictions Due to Volcanic Ash', report commissioned by Airbus