The ash cloud from the Eyjafjallajökull volcano in Iceland has now closed UK airspace for 3 days so far, and scheduled air traffic across the whole of Europe is down by some 75%  (some 6,000 flights today vs the normal 22,000), according to the radio today. Reportedly these disruptions are costing the airlines about £130mn per day -  a figure that mainly seems to be derived from the costs of looking after travellers whose flights have been cancelled. In Europe the legal responsibility for passenger welfare falls squarely on the airline but there are various sorts of indirect costs, which will also fall on insurers (though apparently not all of them are prepared to pay out, given that this is a natural event).

BUT it is important to note that the costs will not fall just on the travel industry and on insurers!! And it won't be just a few hundred holidaymakers who are inconvenienced by being stuck in Cancun for longer than they expected. Oh no!!!!

....though the pain for airlines could be considerable (and perhaps potentially fatal for some) if costs are really racking up at £130mn per day - it isn't as if they can make much by way of a forward plan to minimise the impact, is it?

It is also important not to assume there is going to be a quick fix for the problem, given that previous eruptions have commonly lasted 6-24 months. The exact pattern of disruption from the ash cloud is obviously going to depend on the weather (specifically the winds in the upper atmosphere), but it seems not unreasonable to anticipate months of intermittant disruption as various sectors of airspace are closed to jets. Jets, incidentally, are extremely vulnerable to seizing up in ash clouds, and there seems to be total unanimity amongst aviation experts that this is an area where "safety first" is definitely the right maxim, following the near catastrophe that befell a BA jet that strayed into an ash cloud in 1982!

So....beyond the obvious such as British Airways (LON:BAY) and Ryanair Hldgs (LON:RYA) , the purpose of this article is to identify other businesses () that may be saddled with higher costs, lower revenue or lower production than had been expected.

Why do I say "production"? Well, the answer lies in the "just in time" production methods followed in…

Unlock the rest of this article with a 14 day trial

Already have an account?
Login here