Volcanic Ash May Weigh on European Economy

FRANKFURT — The past weekend was definitely not a good time to be a Kenyan flower grower, an Israeli avocado farmer, a package tour operator or anyone else trying to run a business that depends on air transport to or from Europe.

Consider TUI, the largest travel operator in Germany. With all the country’s airports closed because of the danger posed by a cloud of volcanic ash from Iceland, the company, based in Hanover, had to take extraordinary — and costly — steps to bring customers back from Mediterranean vacations.

Late Saturday, TUI flew 540 of its customers from the Spanish island of Mallorca to Barcelona. After staying overnight in hotels paid for by TUI, the vacationers boarded a dozen buses for a 20-hour trip to Frankfurt. From there they continued home by train.

Economists have begun considering when, and to what extent, the extra costs sustained by companies like TUI — not to mention the airlines — will start to damage Europe’s already shaky economy.

Most say the effects will not be catastrophic if the skies clear soon.

There were signs of hope Sunday as airports in Frankfurt, Berlin and some other European cities reopened on a restricted basis, at least temporarily.

But a longer spell of airport closures — or intermittent disruptions in the coming weeks and months as the volcano continues to erupt and winds carry the ash to Europe — could start to take a toll.

“Given that the recovery of the euro-area economy is anyway so weak, it might have an impact,” Daniel Gros, director of the Center for European Policy Studies in Brussels, wrote in an e-mail message.

While most economists are not predicting that the volcano will push Europe back into recession, there is a risk of unexpected consequences that could amplify the economic damage.

If, for example, ash falls to the ground in greater quantities than expected, creating a real or perceived health risk, consumer sentiment could have a serious decline.

“People get spooked and they don’t do anything anymore,” said Jacques Cailloux, chief European economist for Royal Bank of Scotland in London.

While such a prospect is unlikely, Mr. Cailloux said, “it’s something to be monitoring.”

Even if the macroeconomic effects are limited, businesses and industries that depend on air transport are already feeling the pain. Kenyan growers, who account for 35 percent of the European Union’s imports of flowers, are losing up to $2 million a day in earnings because they cannot fly their blooms to market, Reuters reported.

Produce growers in North Africa and Israel will suffer the same effect. Most fresh produce travels by air because it is perishable.

“Europe is the market where they get the most profit,” said Aliza Fleischer, a specialist in the economic effects of climate change at the Hebrew University of Jerusalem.

Makers of high-tech goods like semiconductors and cellphones could have their finely tuned logistics operations thrown out of whack.

“Where you might have an impact is where the goods are mission critical — phones, parts that are important to the production process,” said Mr. Cailloux of Royal Bank of Scotland.

As if Greece did not already have enough problems managing its debt, the country could be among the hardest hit if the disruptions continue long enough to interfere with the peak holiday season.

“It could make matters worse for Greece, which obviously needs every penny from tourism,” Mr. Cailloux.

Hard to measure, but potentially significant, is the effect of the air travel shutdown on productivity. Hundreds of thousands of people will miss work because they are stuck in a foreign city somewhere, said Peter Westaway, chief economist for Europe at Nomura’s offices in London. He should know. Mr. Westaway spoke by cellphone from Tokyo, where he was watching British football on a barroom television at 3 a.m. and waiting for news of when he might be able to get back to London.

The effect will not be drastic if the airport shutdowns end soon, but could be significant if the situation lasts longer.