European Travel, Business Stuck In Volcano Ash

Travel disruptions across northern Europe have stretched to a fourth day as a volcano in Iceland continues to spew cloud ash into the sky. Airspace remains closed, and that's spelling more canceled flights and untold economic turmoil. Host Liane Hansen speaks with Nariman Behravesh, chief economist for the consulting firm IHS Global Insight.

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LIANE HANSEN, host:

This is WEEKEND EDITION from NPR News. I'm Liane Hansen.

Air travel disruptions across northern Europe have stretched to a fourth day as a volcano in Iceland continues to spew a cloud of ash and grit into the sky. The closed airspace means more cancelled flights, thousands of stranded travelers and untold economic turmoil.

Nariman Behravesh is chief economist for the consulting firm IHS Global Insight. He's on the phone. Nariman, welcome back to the program, but I understand we've reached you on a train on the way to a conference in Italy?

Mr. NARIMAN BEHRAVESH (Chief Economist, IHS Global Insight): That's correct. Yeah, I started my trip last night in Copenhagen and I'm on my way to Rome. It's going to take a total of about six hours to make this trip but it's an adventure.

HANSEN: Yeah, six hours of adventure. Would you normally take a train to get to Italy?

Mr. BEHRAVESH: No, not at all. I normally would fly, and were scheduled to fly this evening but we had to change our plans, of course.

HANSEN: Well, I really want to talk about the economic effects of this airline crisis. We know many of the European countries involved already are dealing with a recession. Obviously the airlines are losing money. So, what do you see is the long-term economic impact?

Mr. BEHRAVESH: Well, of course, a lot depends on how long this volcano keeps spewing ash into the atmosphere. You know, theres a distinct chance it could go on for a while, in which case the economic cost could be pretty horrific. You know, you hear estimates of anywhere between 200 and 500 million a day in terms of the costs to the airlines. That can add up very quickly, of course.

HANSEN: Sure. What other companies will be losing money though? Who loses money in this?

Mr. BEHRAVESH: Well, it's conferences and tourism. People who had planned to Europe, for example, from the U.S. have had to postpone those trips. Some may, you know, have had to cancel them. The concern is that some of this business and won't be retrieved in any way, and so that's the concern.

HANSEN: Yeah, but airline passengers are stranded. So, hotels, restaurants, ground transportation, trains, buses - they must be making some money.

Mr. BEHRAVESH: Yeah, there is some upside, of course, in the sense that trains, as you say, even car services are benefiting from this. But that's probably not enough to offset the loss of business to the airline.

HANSEN: Yeah. What about air cargo? Things like food, other goods across northern Europe - did anybody expect shortages?

Mr. BEHRAVESH: Yeah, I don't think food's the issue 'cause a lot of that goes by rail and boat and so forth. And the issue - I think there's a couple of them. One is perishables - things like flowers, for example - those can't go by ship. But another thing is if there are any sort of tight inventories, like just-in-time inventories and things have to be delivered, I think those kinds of issues could delay manufacturing deliveries, especially probably small, high-precision kinds of go by air rather than by ship.

HANSEN: Have you been talking to your fellow travelers about this? What are they saying?

Mr. BEHRAVESH: Everybody has a story, everybody has a story, trying to get from one place to another. Everybody's been very creative. Everybodys trying to work hard. Mostly, people are in a very good mood, mostly everybody's been trying to be very, very helpful. Not a lot of grumpiness here. You know, everybody's sort of taking it in stride.

HANSEN: Nariman Behravesh is chief economist for the consulting firm IHS Global Insight, and we reached him by phone as he travels through the Alps to Italy by train. Nariman, thanks very much and, frankly, enjoy your train trip.

Mr. BEHRAVESH: Thanks very much, Liane.

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