Volcano spews loss and profit on local businesses

Newsroom 26/04/2010 | 12:52

Last week’s unprecedented airspace closure led to a real blockage in Europe, generating considerable losses for already beleaguered airlines. Blue Air officials told Business Review that the volcano fallout had seen the airline lose EUR 2.5 million. But while in the sky profits turned to ash, on the ground transportation companies and hotels saw their takings erupt. Eurolines Romania for instance told BR that its revenues had more than doubled during the lockdown.

Dana Ciuraru


The volcanic eruption in Iceland and the huge cloud of ash which traveled across the continent globe has left its mark on businesses in Western, Central and South East Europe. The ash plume disrupted flights in Europe, causing several countries to shut down their national air space. Air traffic in Romania was halted for three days last week, with airlines the worst hit by the decision.

“Because of flight restrictions, Wizz Air had to cancel some 130 flights to and from Romania, affecting 19,000 passengers, from April 16-21. The losses are estimated at EUR 2 million per day for the entire Wizz Air network,” Wizz Air officials told Business Review.

One week after the airspace closure, other airlines were also surveying the financial wreckage.

“Blue Air recorded losses of EUR 2.48 million. From this sum, some EUR 1.7 million represents losses from sales, EUR 450,000 reimbursements, EUR 30,000 operational costs at other airports and some EUR 300,000 rescheduling for later flights,” Sherif Ussama, Blue Air’s GM, told Business Review, adding that 164 flights had been canceled with some 20,100 passengers affected. Moreover, the Blue Air GM announced that the company had sent these data to the European Commission and to the government in order “to try to obtain financial support in handling this situation”.

Airlines active under the Ministry of Transportation lost EUR 7 million due to the disruption, of which EUR 4 million was reported by national carrier Tarom alone.


Travel agencies – no lava lost for volcano

Travel agencies have had their days of chaos as well following the volcanic eruption. “Eximtur’s ticketing agency activity was affected, as it had to work a lot to manage the tickets and reservations in direct relation with airlines. For package holidays and business travel, a couple of groups that were supposed to travel during that period canceled,” Lucia Nora Morariu, Eximtur president, told BR.

According to Morariu, travel agencies expect holidaymakers to be more cautious in choosing vacation destinations, especially for charter holidays. “I believe that Romanians will focus more on much closer destinations, which are accessible by car or by bus, such as Romania, Croatia, Bulgaria, Austria and continental Greece. More affected could be destinations such as Turkey, some parts of Greece and Spain,” said the Eximtur president.

However, the pace of holiday sales in Romania remains higher than last year. “We have not yet registered massive withdrawal or lack of interest in booking holidays. If the situation stabilizes, I appreciate that there are chances that the volume of holiday sales this year could surpass last year’s level,” predicted Morariu.


Trains, buses, hotels rake in cash from the ash

Bus traffic to Western Europe doubled after the eruption as train tickets were almost impossible to come by, according to Corina Martin, the National Association of Travel Agencies (ANAT) president.

Major transporters gained from the situation. “Revenues reached EUR 200,000, more than double, in accordance with the increasing number of departures. We refused practically nothing and we even ran more services. During this period, the most popular destination was London, followed by Brussels, Paris and Frankfurt. Since April 17, we have had some 25 departures from Romania, more than double the average,” Dragos Anastasiu, Eurolines Romania president, told BR. This is an important boost for his company, as in 2009 the company registered sales of EUR 25.7 million compared with EUR 35.5 million the previous year.

“This year will not be easy for the entire economy, nor for Eurolines. We don’t believe it can get worse than this. Also, we’re seeing fuel prices increasing, but fortunately sales have gone up from the previous period, although the market keeps decreasing,” said Anastasiu.

Elsewhere CFR supplemented some of its departures to Vienna, Budapest, Istanbul and Bulgaria. “To Budapest, the occupancy rate was 100 percent, while for Vienna there was demand for 50 percent more. However, there were additional coaches for all the national and international routes situated in the north of the country, where there are airports as well,” said CFR Calatori representatives.

At the four-star hotel Phoenicia Express six kilometers away from Henri Coanda Airport, which is controlled by businessman Mohammad Murad, there were more tourists than usual. “We have had Spanish tourists in the hotel since Saturday and they have extended their stay,” said a hotel representative.

And the largest hotel in Bucharest, Rin Grand Hotel, controlled by the Negoita brothers, also catered to more tourists in the aftermath of the volcano eruption. “We had an occupancy rate greater than 30 percent. However, this week I expect to have reservations and cancellations, from foreign customers who were supposed to come to Romania,” said Ionut Negoita.



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