the global impact of iceland assignment 3

7/31/2019 The Global Impact of Iceland Assignment 3

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Assignment No. 3

GLOBAL IMPACT OF

ICELANDS

VOLCANO

Submitted by:-

AKHIL AHOOJA

BRANCH-MBA(M&S)

FORM NO:-5018275

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The Global Impact of Icelands Volcano

The cloud of ash from IcelandsEyjafjallajokull volcano caused the cancellation of thousands

of flights for travelers; shortened the guest list at the Polish presidents funeral; cost airlines at

least $200 million a day; and shook the already fragile economies of countries across Europe.

Seismic activity started at the end of 2009 and gradually increased in intensity until on

20 March 2010, a small eruption started rated as one on the Volcanic Explosivity Index.

Beginning on 14 April 2010, the eruption entered a second phase and created an ash cloud that

led to the closure of most of Europe's IFR(International Flight Rules) airspace from 15 until

20 April 2010. Consequently, a very high proportion of flights within, to, and from Europe

were cancelled, creating the highest level of air travel disruption . By 21 May 2010, the second

eruption phase had subsided to the point that no further lava or ash was being produced. More

seismic activity was produced. Due to the large quantities of dry volcanic ash lying on the

ground, surface winds frequently lifted up an "ash mist" that significantly reduced visibility and

made web camera observation of the volcano impossible.

With the eruption of this volcano various problems were faced by the trading industries all over

the world. Following are the few impacts:-

1)Air Travel:-

The most direct casualty of the ash was the airline industry .The International Air TransportAssociation (IATA) estimated that airlines are collectively losing 130m per day in lost revenues

.If the disruption persists for several weeks, total losses could run into billions, having a

catastrophic effect on an industry already set to lose 1.4bn this year.Travel companies were also

losing out. The Prime Minister Gordon Brown admitted the problem was so serious that financial

help for airlines would be considered.

2) Other Travel:-

Other transport companies are benefiting as passengers look for alternatives to flying. Eurostar,a

railway service in Europe came out with its statics that it carried 50,000 extra passengers in two

days - an increase of nearly a third - with services effectively full. It began laying on extra services,

with six extra trains planned . Train services between Scotland and the south of England were also

reporting a big rise in passenger numbers, as were cross-channel ferry companies. P&O ferries said

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that their services between Spain, France, Holland and the UK were currently either full or close

to full.

3)Tourism:-

The impact on the tourism industry is expected to be relatively small, if the disruption lasts no

longer than a few days. Although the tourism industry will lost money from customers unable to

make the trip, stranded passengers unable to return home were also be forced to spend more money

than expected - offsetting some of those losses. Prolonged disruption resulted in greater impact on

tourism, however, especially in the run-up to the busier summer months .

4)Imports and Exports:-

International trade relies more heavily on road, rail and sea freight than it does on air freight .For

example, just 1% of the UK's trade, by volume, is carried by air .But the disruption has caused real

problems for those trading perishable goods, including food and flowers, which depend on air

freight.

5) Other Businees Costs:-

There were some other firms whose business went down after this eruptions

a)Automotive Firms:-

Automotive firms suffered their productions due this volcano eruptions in Iceland.

Nissan:-

The Japanese car maker, stopped production at two factories because it ran out of air pressure

sensors to be supplied from Ireland. Production could be restarted at the factories in Kyushu,

southernJapan only if Nissan receives a delivery of the parts, which are designed to warn drivers if

their tyre pressure drops too low.

BMW:-

BMW production was halted at plants in Din golfing, Regensburg and Munich, this all resulted in

delayed delivery of 7000 vehicles to the customers.

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b)Agricultural &Horticultural Firms:-

5,000 day laborers in Kenya who had been without work since the ash cloud from Iceland shut down

air traffic across Europe, showing how one event can have drastic consequences in distant lands in

today's global economy. Asparagus, broccoli and green beans meant for European dinner tables were

being fed to Kenyan cattle because storage facilities were filled to capacity.

Horticulturist in Netherlands were not able ship there flowers to the World markets resulting in

their huge losses in June 2010.

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the global impact of iceland assignment 3

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