British Airways calls for compensation on flight ban

British Airways seeks compensation for ash chaos

British Airways has said it has asked the European Union and the UK government
for financial compensation for the closure of airspace.

It also wants UK airspace restrictions eased after its test flight through the
no-fly zone revealed “no variations in… normal operational performance”.

Chief executive Willie Walsh called on the government to adopt new policies that
would “allow us to resume flying”.

The airline estimates that the crisis is costing it about £15m to £20m a day.


BA employee talks to passengers at O'Hare International Airport in Chicago

Virtually all flights in and out of the UK have been grounded since 1100 BST
on Thursday because of volcanic ash.

“This is an unprecedented situation that is having a huge impact on customers
and airlines alike,” said BA chief executive Willie Walsh.

On Sunday, BA ran a two-and-a-half-hour test flight over the Atlantic to assess
any damage caused by the ash.

Mr Walsh said: “The analysis we have done so far, alongside that from other airlines’
trial flights, provides fresh evidence that the current blanket restrictions on
airspace are unnecessary.

“We believe airlines are best positioned to assess all available information
and determine what, if any, risk exists to aircraft, crew and passengers.”

BA said that when it did start flying again, those who had tickets for a specific
flight would have priority and would not be bumped off for stranded passengers.

It said it would consider flying more planes, or larger aircraft, as a way of
dealing with the backlog.

‘Exceptional circumstances’

The airlines believe they are due compensation because the decision of whether
to fly or not has been unfairly taken out of their hands.


The airlines believe they have a moral case for compensation from taxpayers,
in that they have been deprived of the ability to make their own judgements about
whether it is safe to fly

Robert Peston, BBC business editor

EU competition commissioner Joaquin Almunia said the EU was considering easing
its rules barring government subsidies to airlines.

“I am looking carefully at what we did after September 11. We can use similar
instruments. We are indeed facing exceptional circumstances,” he said.

Independent airline analyst Saj Ahmad said the challenge would be ensuring that
any potential compensation is equally distributed.

“Low-cost airlines may feel aggrieved if they receive smaller payouts because
they benefit from lower costs than rivals,” he said.

“But for a carrier like BA that has already lost nearly £50m due to a cabin crew
walkout, every penny counts – not least because some of this money will have to
be used to compensate and refund passengers.”

Both the insolvency firm Begbies Traynor and the financial services group KPMG
warned that the crisis would leave some carriers facing financial distress.

Prime Minister Gordon Brown said that the European Solidarity Fund, designed
to provide aid to EU members hit by natural disasters would be the likely source
of any compensation for businesses hit by the disruption.

However the BBC’s political correspondent Reeta Chakrabati said it was still
unclear how much money would be available and who would be able to access it.

‘No compromise’

Despite the huge losses being incurred, BA said it still had “significant funding”
available to allow it to stay in business should flights be grounded for a “considerable


Before the disruption, the airline had more than £1.7bn in cash reserves to draw
on, as well as more than £400m in available credit.

European airlines have been critical of the way the EU has handled the crisis,
and have pushed for the reopening of airspace as quickly as possible.

European transport commissioner Siim Kallas said there must be “no compromise
on safety”, but admitted that a prolonged closure of airspace was “not sustainable”.

British Airways shares fell by 1.4% in Monday trading in London, closing at 231.7
pence. It clawed back some of the losses later in the day, as news emerged that
there would be some flights operating from the UK on Tuesday.

The German flag carrier Lufthansa said it had not put in any claim at this stage
but was looking at its options.

Air France-KLM is also believed to be pursuing compensation from the EU.

Meanwhile, Peter Long, the chief executive of TUI, Europe’s largest travel operator,
told the BBC that the company had written to the government asking for recompense.

TUI says the crisis has cost it £20m so far and was continuing to cost it about
£5m to £6m a day.

see also
19.4.2010   (ABTN)

 by Stanley Slaughter

British Airways today called for the EU and the UK government to compensate it
for lost revenue from the ban on flights caused by the cloud of volcanic ash over

The UK carrier said it estimated its daily losses through the ban were £15m-20m.

This included lost revenue from passengers and cargo and the cost of supporting
stranded and delayed passengers.

Airline ceo Willie Walsh called it an “unprecedented” situation which was having
a “huge impact on customers and airlines alike

Walsh said: “To assist us with this situation, European airlines have asked the
EU and national governments for financial compensation for the closure of airspace.

“There is a precedent for this to happen as compensation was paid after the closure
of US airspace following the terrorist events of 9/11 and clearly the impact of
the current situation is more considerable.

“We welcome the EU’s initiative to address the economic consequences of the airspace
closure on the air travel industry and the wider European economy.

“We are also in touch with the UK government which has set up a group to work
on this issue as it recognises the impact on airlines and the contribution that
aviation makes to the British economy.”

In its statement BA said it had “significant funding available to it to sustain
a considerable period of closure of the UK’s airspace.

“At the start of the flying restrictions on April 14, 2010 it had more than £1.7bn
of cash and more than £400m available credit lines which it can draw on if necessary.”



Earlier   (see  )

“British Airways is not insured for these circumstances. A spokeswoman told the
BBC it is because it ‘has no insurance against natural disasters’, it will have
to absorb costs itself.



Comment from an AirportWatch member:


BA are being totally “2 faced”. They have openly admitted that they have never
taken out insurance against an event of this nature. Such a decision is completely
available to them as a valid way of doing business and it results in their  saving
money by not paying insurance premiums. If they used those savings to lower fares,
rather than to build up a pot of money to cope with such a situation, again, that’s
their decision.

But they can’t expect the taxpayer to pay out for what they either (a) should
have paid to an Insurer, or (b) put aside for a “rainy day”.   In short, they operated
“their way” in a free market. They must now PAY for those decisions.

And what’s more if our Navy brings unfortunately stranded people back free of
charge,  then that should also be paid for by the airlines who benefit!