Airlines scramble to minimise losses as Bali volcano costs grow

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A fisherman drives a traditional boat as Mount Agung erupts in the background on November 28. AFP

SINGAPORE (Reuters) – As a shutdown of Bali’s airport is extended due to volcanic ash, airlines bracing for millions of dollars of lost revenue per day are scrambling to minimise damage by offering travel to other destinations and alternative transport off the island.

The airport on the Indonesian tourist island was closed for a second day yesterday because of ash from the eruption of the Mount Agung volcano, which has already disrupted several hundred flights and tens of thousands of passengers.

With no immediate sign of the eruption ending any time soon, industry experts say airlines may consider making longer-term flight frequency adjustments to Bali as forward bookings collapse and risks of ash damaging aircraft linger.

AirAsia will look to redeploy capacity elsewhere in its network, the airline group’s chief executive Tony Fernandes tweeted yesterday, without providing details of any adjustment.

Most airlines are for now offering various options to minimise the short-term impact, preparing customers to expect scheduled disruptions until at least December 4.

“If this situation is prolonged for 2 to 3 months, it is possible that the airlines could reduce their Bali flights in the upcoming northern summer schedule that starts from end-March,” said Corrine Png, chief executive of transport research firm Crucial Perspective, although she said they would be wary of losing airport slots when demand eventually returned.

Australia’s Jetstar is allowing passengers to re-route to other holiday destinations like Phuket in Thailand, while Singapore Airlines Ltd budget offshoot Scoot said it would transport stranded passengers by bus and ferry from Bali to the city of Surabaya on the neighbouring island of Java for flights back to Singapore.

Png said each day that the Bali airport was closed meant about $5 million in combined lost flight revenue for the 42 airlines that fly there.

“This comes at a bad time for the airlines as we are in peak travel season right now and the Bali route is highly lucrative,” she said.

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