Where Will the Dust Settle?


Recriminations start as the flight ban is lifted

For nearly 200 years, the volcano under the Eyjafjallajökull glacier in Iceland was dormant. Business worldwide will no doubt agree that 200 years was not nearly long enough, and for some business sectors, the impact of the recent eruption is disastrous. The airline industry has seen the greatest turmoil since World War II, surpassing the impact caused by the terrorist events of 9/11. As a result of the eruption, the cost to the airlines, airports, tourist industries and other business sectors dependent upon the free movement of passengers and cargo has resulted in losses exceeding £100 million per day and in excess of £1 billion in total. However, as the flight ban has been lifted, the arguments as to who ultimately is responsible for the cost have started, with accusations being made against the role played by the Civil Aviation Authority, the airlines' response to and interpretation of the EU regulations, and the government contribution.

In circumstances where there is obvious uncertainty and open disagreement over who should be footing avery sizeable bill, the focus almost inevitably will be directed to the insurance protection purchased by businesses worldwide to cover events causing an interruption to normal business operations. If there is a silver lining to the ash-filled cloud, it is that insurance policies may provide coverage notwithstanding the lack of clarity in the current position.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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