Hundreds of flights have been canceled and Bali international airport was shut down due to Volcano eruption in Bali. So far over 400 flights were cancelled stranding 59 000 travelers since the Bali's Ngurah Rai airport - also known as Denpasar International airport - closure on Monday because of falling volcanic ash. After reviewing the situation, the local government has reopened the airport on Wednesday; however, the authorities still warn that a major eruption of the volcano can occur anywhere between a few hours to a few days. The shut down has already caused a ripple effect throughout Indonesia with delays in other airports over connecting flights.

The Mt Agung seismic activity has been increasing over the past few months; however, the first eruption of the volcano last week hasn’t caused major air travel disruption until this week. Currently the question of how long the eruption will last remains unclear, but authorities warn that it can reach a size similar to that seen in 1963.  The government has ordered evacuation of approximately 100 000 locals in the area surrounding the volcano in the 10km radius and tourists who were unable to leave as a result of flight cancelations were planned to be transported to a different island.

The main reason for flight cancellations is ash clouds. A report from local aviation navigation authorities showed that aircraft flight channels were covered with volcanic ash. The ash clouds pose a threat to aircrafts because the ash particles cause damage to the plane by cooling in the engine and forming it with a glassy coating. This can cause the engine to stall or fail completely. So even though the number of cancelations is disastrous to air travel in the whole region, the precautions taken were a must.

Airlines are already bracing themselves for the upcoming revenue loss of millions of dollars per day caused by cancelations. Currently it is estimated that airlines are losing about $5 million in revenue for the 42 airlines that fly there. The companies will likely have to make longer-term flight frequency adjustments to Bali reducing capacity and for now flight disruptions are expected to last at least till December 4.

“It is really no surprise that cancelations even for a few days will have a lasting impact” shares CEO Skaiste Knyzaite “We have to take into account not only the canceled flights themselves, but the impact it has on connecting flights, delayed flights and the pressure the airlines will be experiencing to bring back tourists once the flights resume. Also the disruptions will probably have a negative impact on flight personnel rotas which can also influence scheduling – stand-by flight crews will have their work cut out for them” she continues.

This is not the first time the airline industry has had to deal with major disruptions because of natural disasters – most notable is the 2010 eruption of Eyjafjallajökull in Iceland that shut down most of airspace in Europe for a week. The industry then suffered a major $1.7 billion loss and almost every country with an international airport experienced some disruption due to flights to or from Europe being canceled. The disarray caused was even greater than after 9/11 attacks.

“So far the disruption is nowhere near the massive one caused in 2010, yet it will definitely result in major losses for the airlines, especially considering that events in Bali are still unfolding.” Said Skaiste Knyzaite. Virgin Australia already has scheduled four recovery flights, Australia's Qantas Airways Ltd said it and budget arm Jetstar would run 16 flights to Australia on Thursday to ferry home 3,800 stranded customers while Singapore Airlines (SIA1) (SINGY) and SilkAir are seeking approval to operate additional flights on Thursday.