Meanwhile Network Rail pledged to do everything possible to help stranded travellers make journeys by train.
Virgin Trains said 7,000 extra seats would be made available on Monday, mainly on routes between Birmingham and Glasgow and Edinburgh, and between London Euston and Glasgow.
Eurostar is also laying on extra services through the Channel Tunnel.
The latest dense patch of ash has already disrupted the travel plans of tens of thousands of people over the weekend, mainly in northern parts of the UK.
Airspace over Northern Ireland was the first to close on Saturday, before the cloud moved south and grounded flights in many parts of the UK on Sunday.
Ash from the Eyjafjallajokull volcano has led to thousands of flights being delayed or cancelled across Europe since April.
Restrictions are based on the density of ash in airspace, and the threshold level that forces a ban was raised by the CAA following six days of airport closures last month.
But after the latest airport closures this weekend, airlines have criticised the amended regulations.
On Sunday, Virgin Atlantic president Sir Richard Branson called the closure of Manchester airport “beyond a joke”.
“All the test flights by airlines, aircraft and engine manufacturers have shown no evidence that airlines could not continue to fly completely safely,” he said.
British Airways said airlines should be able to decide whether it was safe to fly, as the current approach was “overly restrictive”.
But Mr Hammond said: “The threshold at which air is considered unsafe to fly through has already increased 10-fold from a 200-microgram limit to a 2,000-microgram limit, and that was agreed with the airlines after the last period of closure.
“Work is ongoing with the airlines, with the aircraft manufacturers, with the engine manufacturers, to see if a safe operating regime could be introduced at a yet higher threshold of ash, with enhanced, more regular engine inspections.”
He told BBC Radio 4’s Today programme: “We are not there yet but we are optimistic that progress will be made and that, of course, would have a very significant impact on the level of disruption that the continuing volcanic eruption is having on UK airspace.”
CAA chief executive Andrew Haines said: “It’s the CAA’s job to ensure the public is kept safe by ensuring safety decisions are based on scientific and engineering evidence; we will not listen to those who effectively say, ‘Let’s suck it and see.'”