Air fares to rise due to volcanic ash crisis

Air fares are likely to go up by more than 11 per cent as airlines try to claw back the £1.3 billion they lost when they were forced to ground flights across Europe due to the volcanic ash cloud.

The Centre for Economics and Business Research said fares would rise by a little over five per cent this year, almost three per cent next year and a further 3.4 per cent in 2012.

The rises would add more than £60 to the cost of a return flight to New York over the next three years, according to the report which also factored in rising jet fuel prices.

Fuel is the main cost for airlines and oil prices were up by almost two-thirds in the first three months of this year compared with the same period of 2009.

Airlines are expected to ask for a bail-out by the European Union to cover some of the lost revenue and additional expenditure incurred when flights were grounded across Europe, but they are expected to recoup most of the money from higher air fares.

International airlines are already billions of pounds in debt and with very few actually making profits it seems inevitable the ash crisis will have pushed many to the brink of collapse.

Scheduled Airline Failure insurance is available as an optional extra to customers buying travel insurance. It costs just a few pounds more but gives air passengers the promise of a refund if their airline goes bust before or during their trip.

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