Nr. 12-2011 Published monthly by:
The Swedish Chamber of Commerce
in Estonia

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Economical impacts - The losses for airlines due to the air traffic stand still amounts to EUR 220 million per day, said IATA's – International Air Transport Association's Director General & CEO, Giovanni Bisignani as considerable parts of European airspace was closed in April.

The airlines' losses are huge but still remain a small part of the total economical impact the air traffic stand still had. Commerce, trade and the world economy is highly internationalized and the air traffic disruption got global consequences.

img - Measured in tonnes, Swedish imports and exports by air cargo only accounts for a few percent. But measured in value, air cargo shipments to and from Sweden account for a 40% share, said the Swedish Air Transport Industry Employers' Association and the Swedish Association of Aviation Companies in their joint statement on the air traffic stand still. Swedish industries are depending on air cargo shipments for their production as well as vital parts of their exports.

Lacking air cargo deliveries of a certain type of sensors, five car manufacturing plants in Europe had to close down for a couple of days in April resulting in 10.000 fewer cars being produced. With production based on just-in-time logistics, in-house stocks of components often only last for a few days.

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Carl-Eric Lindström
- DHL Express in Estonia reacted quickly, says Carl-Eric Lindström, Managing Director DHL Express Baltic's. Normally we fly our express shipments Tallinn – Helsinki – Leipzig during nighttime, but as the airspace was closed we changed over to road transports and had trucks taking the shipments to the DHL hub in Leipzig. And when Leipzig airport was closed, we trucked to other open airports in Europe.

- In some cases shipments were kept on hold in the country of origin to avoid congestions at the hubs. We, as well as other courier companies and cargo airlines, had delays but our customers understood the situation.

- As the situation eased up, we got back to normal routines again, but it took us some days before the whole network functioned again.

- A colleague and friend of mine, who is DHL's managing director on Iceland, happened to be in Hong Kong when the Eyjafjallajökull volcano erupted. There was no chance for him to get back, so he simply had to follow the development on TV and work via e-mail, concludes Carl-Eric Lindström.

The economical impact of the air traffic stand still reached further outside Europe.

img - Normally we export some 1.000 tonnes of flowers, fruits and vegetables per day. A considerable part is shipped by air to Europe and now we are in a situation where we simply just have to dump our products with income losses amounting to 2 million USD per day, said Stephen Mbithi, spokesman for FPEAK – Fresh Produce Exporters Association of Kenya.

The situation was equally gloomy in Ethiopia and Zambia as both countries also export large quantities of fresh flowers, fruits and vegetables to Europe.

img Fresh Norwegian salmon is a sought-after and important ingredient in Japanese sushi-restaurants and the Norwegian North Atlantic fishermen now experienced their catches being stranded in lack of air cargo flights to Tokyo, Osaka and other important Japanese destinations.

Following the terrorist attacks September 11th, 2001, US airspace was closed for three days. Airlines reported losses amounting to 1,4 billion USD and the US Government granted them substantial support.

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Siim Kallas
- More than 100,000 flights were canceled across Europe and the disruption is estimated to have cost the region's air-transport industry, airlines and airports included, between 1,5 – 2,5 billion euro, said EU's Transport Commissioner Siim Kallas in an end of April statement. European governments will now be allowed to make aid payments to airlines to help compensate for the losses.

- However, if support from the member states takes the form of state- aid measures, it must be granted on the basis of uniform criteria established at a European level. It cannot be used to allow unfair assistance to companies which are not directly related to the closings of European airspace.

Not waiting for EU's final set up for support, the Swedish Government announced some initial mitigating measures for Swedish airlines.

- We offer airlines respite with paying social and income taxes as well as respite with paying certain operational fees at the airports, said Maud Olofsson, Sweden's Deputy Prime Minister and Minister for Enterprise and Energy, in an end of April statement.

The US based financial services company Goldman Sachs took a somewhat cooler and calmer attitude to the economical impact of the European air traffic stand still.

img - The closing of European airspace only has a minor affect on the EU's GDP, said Goldman Sachs. The airlines' contribution to the eurozone's processing added value is only 0,2%. And, even if the airlines now are facing economical problems, other means of transports gains; primarily transports by rail and truck.

At Amsterdam's Schiphol Airport. The hand written sign reads:
"Europe. Anywhere. 60 cents per km! 3 seats."

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