European flights resume, new ash cloud on horizon

AMSTERDAM (Reuters) - Flights from large parts of Europe are set to resume on Tuesday under a deal agreed by the European Union to free up airspace closed by a cloud of ash hurled into the sky by an Icelandic volcano.

However, with the cloud still spreading and only sketchy details of how the authorities would split European airspace into areas where aircraft could fly or not, other countries are adopting a more cautious approach.

"From tomorrow morning we should see more planes flying," EU Transport Commissioner Siim Kallas told reporters on Monday after EU transport ministers held a video conference.

The deal brought relief to some of the millions of passengers whose travel plans have been disrupted worldwide since Thursday, and offered hope to frustrated airlines worldwide losing $250 million a day from the shutdown and seeing their shares tumble.

"I'm so happy," said one man with tears in his eyes as he ran for his flight from Schiphol Airport on Monday night, one of three bound for New York, Shanghai and Dubai from Amsterdam with almost 800 passengers on board.

Dutch Transport Minister Camiel Eurlings promised weary travelers that the Netherlands was "taking a lead" in getting Europe moving, but said its airspace could be closed again if ash levels rose.

But neighboring Germany will mostly maintain its no-fly zone until 1200 GMT, and in Britain, where some northern airports excluding London's international hubs will reopen from 0600 GMT, National Air Traffic Services warned ominously:

"The volcano eruption in Iceland has strengthened and a new ash cloud is spreading south and east toward the UK."

The cloud brushed up against Canada's eastern seaboard on Monday, but Environment Canada said it was diffuse, moving slowly and should not affect Canadian airports.

AIRLINE LOSSES

The EU deal was reached under pressure from the airline industry, which says it is losing $250 million in revenue a day. The global freight supply chain is also beginning to sag.

Under the agreement, which Kallas said would go into force from 0600 GMT, the area immediately around the volcano will remain closed.

But flights may be permitted in a wider zone with a lower concentration of ash, subject to local safety assessments and scientific advice, the European aviation control agency Eurocontrol said in a statement.

Airlines had declared numerous test flights problem-free over the past days, but experts have disagreed over how to measure the ash and who should decide it is safe to fly. A British Airways jet lost power in all four engines after flying through an ash cloud above the Indian Ocean in 1982.

France said it was reopening some airports to create air corridors to Paris. Italian airspace will open from 0600 GMT.

Eurocontrol said it expected up to 9,000 flights to have operated in Europe on Monday, just a third of normal volume.

"The scale of the economic impact (on aviation) is now greater than 9/11, when U.S. airspace was closed for three days," International Air Transport Association (IATA) head Giovanni Bisignani said.

"We must move away from this blanket closure and find ways to flexibly open air space, step by step." [nLDE63I0GA]

Worldwide, industry losses for passenger airlines and cargo companies could reach as much as $3 billion from the cloud, Helane Becker, an analyst with Jesup & Lamont Securities, told Reuters Insider on Monday. For U.S. airlines, she estimated the impact at $400 million to $600 million.

TRAVEL MISERY

Firms dependent on fast air freight were feeling the strain.

Kenya's flower exporters said they were already losing up to $2 million a day. Kenya accounts for about a third of flower imports into the European Union.

"Everything (is being) pushed back down the pipeline," said Greg Knowler, editor of Cargonews Asia in Hong Kong. "The freight forwarders are actually sending stuff back to the factories ... One German forwarder that's based here reckons they have 4,000 tonnes of backlog in Hong Kong."

Millions of people have had travel disrupted or been stranded and forced to make long, expensive attempts to reach home by road, rail and sea, as well as missing days at work and school at the end of the busy Easter holiday season.

British businessman Chris Thomas had been trying to get home from Los Angeles since Thursday, when the air shutdown began.

He first flew to Mexico City. From there, he aimed to fly to Madrid and spend $2,000 to rent a car for the 14-hour drive to Paris. He was booked on the Eurostar Channel tunnel train to London, and then planned to drive four hours to Wales.

"It's all a bit crazy but you have to err on the side of caution," Thomas said. "Nobody wants to be on the first plane to go down in a volcanic cloud."

In sport, soccer's European Cup holders Barcelona set off on a two-day road trip of nearly 1,000 km on Sunday to play Inter Milan in a Champions League semi-final on Tuesday.

Businesses have had to find alternative ways of operating. Communications provider Cisco Systems said companies were turning to videoconferencing to connect executives.

"We have seen a huge spike in usage," said Fredrik Halvorsen, head of Cisco's TelePresence Technology Group.

Britain is deploying three navy ships including an aircraft carrier to bring its citizens home from continental Europe. The British travel agents' association ABTA estimated 150,000 Britons were stranded abroad. Washington said it was trying to help 40,000 Americans stuck in Britain.

About 25,000 travelers are stranded in the Philippines. "Lucky for me, I have my laptop and I could still do some work," David Hampson, a humanitarian worker from Manchester, England, told reporters at Manila's international airport.

(Reporting by London, Geneva, Dublin, Paris, Amsterdam, Brussels, Reykjavik, Washington, Frankfurt and Berlin newsrooms; Writing by Dominic Evans and Alison Williams; Editing by Kevin Liffey)