Icelandic Volcano: Lessons Learned

This year has been turbulent for European markets. Just as the EU commission was preparing to start discussions on Iceland’s acceptance in to the economic bloc of 27 nations, the volcano erupted and caused the lock down of an entire European airspace.

Nobody could have predicted the event but the consequences were enormous. Thousands of passengers were stranded in airports unable to get to their places of destination, air cargo sat in warehouses waiting for the airspace to be opened and thousands of manufacturers were forced to close the assembly plants due to the lack of vital manufacturing components. Among them was one of the best known auto manufacturers in the world, BMW.

According to the director general of IATA Giovanni Bisignani, airlines have been the most affected, with an estimated loss of $1.7 billion during the 6 day lock down. He applauded the decision of the EU governments to compensate the airlines and stressed the urgent need to reform the EU travel system. He highlighted the need of creation of a “single European sky”, that envisions a European network manager, functional air space blocks and a unified framework to maintain efficient operation of the system. The measure is expected to save $5 billion in overall operational costs and reduce the carbon emissions by 16 million tons a year.

Besides the unified management system, he highlighted the need for the contingency plans and systems of communication and transportation in the events similar to the Icelandic volcano. According to Bisignani, the volcanic eruption exposed the inability of the current transportation system to deal with the natural disasters.

The April standstill in the European skies highlighted the importance of the aviation industry in the everyday lives of Europeans. It showed that it is a vital lifeline for the economic and social well being of the citizens of more than 3 dozen countries, and it is in a desperate need of reforms to make sure that the events of April 2010 will never be repeated.

In the age of globalization, air cargo has become a vital component of successful economic performance. Today’s consumers demand higher quality goods and they want them delivered faster than ever before. Delayed flights and grounded airplanes mean that companies that rely on fast shipping can no longer deliver goods and services and are forced to forfeit the revenues.

This situation has highlighted key challenges the EU must grapple with to address future disasters in a coordinated way. Unlike the USA which has straightforward control over its own airspace, EU member countries must work together in concert to manage theirs. EU transport ministers will be meeting on May 4^th to discuss creation of new regulations to improve the air traffic management of the EU airspace. If the system is created successfully, North American and Asian countries are expected to follow the example and synchronize their systems for improved efficiency.

Even though the new air traffic management system represents a major challenge that the European countries will try to confront, it is expected to bring a much needed effectiveness and efficiency that current EU system critically lacks.