Friday, April 16, 2010

Force majeure, Volcanic Eruption and global travel

It is the day-two of the volcanic eruption in Iceland, leading to the worst imaginable case of Butterfly effect in Europe and even rest of North America. I was flying out of SFO this morning and on the air-train ride from the rental-car station, I noticed a couple of Air France and British Airways 747-400s parked away from the terminal and I realized these were among the stranded planes unable to get out to Europe that I had heard about on the radio, on the way in. Of course, the ripple effect is obvious:

  • Stranded passengers, impact on schedules, appointments etc etc

  • Airlines scrambling for the aftermath when the skies open up and they will have to re-book all the stranded passengers

  • Missed appointments, business meetings, deals and the whole nine yards

  • Ripple effect from Europe to Asia, to North America. Many passengers flying from Eastern part of US and Canada to South Asia (India, Pakistan, Bangladesh), middle-east and even to China, travel by airlines that have stopovers in Europe. With Europe pretty much closed, one can imagine the ripple effect on those passengers.

The road-warrior in me can empathize with the plight of stranded passengers flying back from work/projects to families, to holidays or for critical business meetings.

A few years ago when I wrote the chapter on external factors impacting global business in my book, I called out some of the key aspects of “External Landscape” on the business of Offshoring. If I were to revise the chapter, I would probably add a section on how Volcanic Eruption in Iceland caused global Travel disruptions, impacting business travelers – techies and managers flying to/from Europe, to/from North America via Europe, stranded for days at Airports or their base locations.

Even with all the Hollywood movies and themes we have seen, not many would have imagined this. And of course, Force majeure clauses and Travel Insurance policies may not have called out impact on travel and flights due to Volcanic ash. I guess this is the stuff real life is made of?!

Bloggers on the topic:
* WSJ: Volcano Insurance, Anyone? Don’t be surprised if European insurers introduce new volcano-related insurance coverage for the airline industry in the coming weeks.
* The storm buffeting God's Rottweiler
* Volcano fallout: Many flights from LAX to Europe canceled
* Smoked Out: Why Volcanic Ash and Planes Fight for the Same Small Airspace
* IATA: Volcanic ash is costing airlines more than $200 million a day
* Will your travel insurance cover problems caused by volcanic ash?
* Iceland Volcano Jams Eurostar