Volcano cost to NZ: $2m per day

The chaos caused by the Icelandic volcano could be costing the New Zealand economy up to $2 million per day, as the closure of airspace grinds air traffic to a halt.

Millions of passengers are thought to have been affected by the closure, as aviation authorities clamp down on air travel amid fears the ash could shut down aircraft engines.

Aviation Industry Association of New Zealand chief executive Irene King estimates the New Zealand economy could be losing $1.5 to $2 million per day from the disruption, with our national carrier bearing the brunt of the cost.

The Centre for Asia Pacific Aviation estimates that eight million passengers have been affected and the total cost for the aviation industry, including airlines, airports, suppliers, freight operators and handlers, could be well over US$2 billion ($2.8 billion).

Ms King estimates Air New Zealand could have been hit to the tune of half to three quarters of a million per day since air traffic ground to a halt last week.

Most of this was passenger and crew cost, she said.

Air New Zealand had earlier said its focus was on moving customers, not the financial implications.

However this afternoon it said it has estimated the net cost of flight disruptions to its business at half a million dollars per day.

"Air New Zealand is currently mitigating the cost to the business where possible and is ready to recommence flights as soon as the restrictions are lifted," the carrier said in a statement.

On a global scale, the effects to New Zealand were minimal, she said.

"I know if BA's fleet is grounded for a day it's 10.4 million Euro."

Added to this were the flow on effects to things like exports, landing fees, airways charges, and the cost of putting up passengers in hotels and food bills.

"(Globally) How on earth do you recover from six days disruption? It's unheard of," Ms King said.

It is understood more than 2000 passengers are stranded in New Zealand because of flight disruptions.

The carrier is advising passengers with travel plans to the affected parts of UK and Europe not to commence their travel today.

Those who do, and who face disruptions to their travel plans, do so at their own expense, Air New Zealand said.

In addition, Air New Zealand said it had been advised there was little to no available accommodation in stop over points like Los Angeles or Hong Kong.

Passengers can defer their travel to another Air New Zealand flight without penalty. Those who no longer wish to travel could apply for a full refund, the carrier said.

Ms King said the intermittent nature of volcanic eruptions meant there needed to be warning systems in place for such events.

"I think this has pretty much caught them unaware and maybe they do not have the volcanic ash monitoring systems that we have in New Zealand," she said.

"That may not be true, but it looks that that way."

As a consequence authorities tended to shut down all of the airspace, she said.

New Zealand had an "identical response" when Mt Ruapehu erupted, although warning systems were now in place, she said.