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A worker at the Virgin Atlantic ticket counter at the Orlando, Fla. international airport stretches as passengers and staff cope with cancellations caused by volcanic ash. (George Skene/George Skene/Orlando Sentinel/AP)
A worker at the Virgin Atlantic ticket counter at the Orlando, Fla. international airport stretches as passengers and staff cope with cancellations caused by volcanic ash. (George Skene/George Skene/Orlando Sentinel/AP)

Fuming airlines demand compensation Add to ...

Global air carriers are demanding compensation from European authorities for overreacting to the threat of the volcanic ash cloud that triggered the world's biggest closing of airspace since 2001, stranded thousands of travellers and has cost the industry more than $1-billion.

European Union transport ministers and air traffic agency Eurocontrol "made decisions based on theoretical models and not on fact," said Steve Lott, a spokesman for the International Air Transport Association.

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Aviation authorities chose to categorize European airspace as being open or closed, but there should have been "shades of grey" all along, Mr. Lott said in an interview.

Those same authorities decided Monday to create three categories based on danger levels from the ash cloud - shrinking the no-fly zone to areas near the volcano in Iceland while deeming large swaths elsewhere safe to fly and a third category deemed flight-worthy under certain restrictions.

But as leading airlines prepared to resume at least part of their flight schedules Tuesday morning after five days of being grounded, a new cloud from the volcano threatened to prolong the delays in Britain. The U.K. National Air Traffic Services agency said the situation was "worsening" in some areas, although it still expects more of the country's airports to reopen Tuesday.

British Airways chief executive officer Willie Walsh said compensation will be sought from the European Union and various governments for the virtual shutdown of airspace since last Thursday.

"To assist us with this situation, European airlines have asked the EU and national governments for financial compensation for the closure of airspace," Mr. Walsh said in a statement, after he went on a test flight with pilots to personally vouch for air safety.

Eurocontrol said that while the initial response to the ash threat "was prudent and reduced risk to an absolute minimum, it was now time to move towards a harmonized European approach that permitted flights, but only where safety was not compromised."

Data such as the concentration of ash in the atmosphere will be shared by carriers, the scientific community and air safety experts, Eurocontrol said. Scientists warn that some of the volcanic ash could melt into glass and pose a catastrophic threat to jet engines.

Airline industry experts cautioned that assessing risk is an inexact science, whether it's making a decision to de-ice jets and fly during a cold Canadian winter or determining if Iceland's huge cloud of ash has thinned out enough in some parts to allow safe air travel.

British Airways, Air France-KLM Group and Germany's Deutsche Lufthansa all declared success after their weekend test flights, saying they didn't detect any irregularities due to the ash in the atmosphere.

IATA set up a crisis centre in Montreal last Friday, assigning a dozen staff to help Eurocontrol and European air navigation authorities deal with widespread flight cancellations.

"This crisis is costing airlines at least $200-million a day in lost revenues and the European economy is suffering billions of dollars in lost business. In the face of such dire economic consequences, it is incredible that Europe's transport ministers have taken five days to organize a teleconference," IATA director general Giovanni Bisignani said in a statement from Paris.

Airlines can't afford to have a large fleet of spare planes on hand because of the high costs involved in having dormant assets, so it isn't a simple matter to reschedule passengers.

"They don't have planes just sitting around," Versant Partners Inc. analyst Cameron Doerksen said in an interview.

The carriers also have to reposition aircraft and crew in Europe, North America and Asia, for instance, while keeping labour rules governing work hours in mind.

"We have more than 80 aircraft and almost 3,000 cabin crew and pilots out of position overseas across our global network," British Airways spokesman John Lampl said.

On Monday, Air Canada cancelled flights for a fifth consecutive day, including service at London Heathrow Airport and Frankfurt.

Air Canada's load factor, or the proportion of seats filled by paying customers, reached 81.6 per cent on transatlantic flights last month. Based on such high levels of passenger loads across the industry and the tight supply of planes, it could take a couple of weeks to accommodate stranded travellers and clear the backlog around the world.

Air Canada is forgoing up to $5-million a day in transatlantic revenue, but the Montreal-based company and other global carriers are hoping to recoup some of their losses later this year, counting on customers whose trips have been cancelled to rebook rather than request outright refunds.

Revenue has also been hurt because the airlines haven't been able to reap the rewards of last-minute travellers, who tend to pay higher ticket prices. Thousands of passengers stuck in connecting airports had their hotel bills and meals paid for by airlines.

But Mr. Doerksen said he doubts many consumers will shy away from making new European bookings for this spring and summer, saying uncertainty over new volcanic activity shouldn't be compared with dampened travel demand after consumers became afraid to fly after the terrorist attacks of Sept. 11, 2001.

Follow on Twitter: @brentcjang

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