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EU to probe economic fallout from travel chaos

MADRID, Apr 18 – Europe on Sunday ordered a full probe into the loss of billions of euros by airlines since an Icelandic volcano erupted, prompting the biggest airspace shutdown since World War II.

European Commission chief Jose Manuel Barroso tasked three of his top lieutenants to assess the costs to Europe\’s economy as millions of travellers remained stranded across the continent.

Transport boss Siim Kallas, competition regulator Joaquin Almunia and economic affairs supremo Olli Rehn will "fully assess the impact of the situation created by the volcanic ash cloud on the economy, and the air travel industry in particular," said a statement from Barroso\’s office in Brussels.

The International Air Transport Association has warned that the travel mayhem was costing airlines more than 200 million dollars (230 million euros) a day.

Barroso\’s panel could decide to call an emergency meeting of the 27 European Union transport ministers to examine the costs of tens of thousands of flights cancelled across the continent since the volcano first began spewing out clouds of fiery ash miles into the sky on Wednesday.

By way of illustration, Rehn left three days of talks between European finance ministers in Madrid early on Sunday by car heading for Bordeaux in France before taking a train to Paris in a bid to get back to Brussels on Monday.

The meetings, especially a forum gathering European and Asia-Pacific nations, were themselves heavily disrupted by the transport chaos with leading EU finance ministers from France, Germany and Italy all bailing out early.

Counterparts from a host of nations including China, Japan and Pakistan were also forced to pull out at the last minute, with European Central Bank chief Jean-Claude Trichet following suit.

Germany\’s Lufthansa and Air Berlin said on Sunday that decisions to close airspace were not based on proper testing and that their aircraft showed no signs of damage after flying without passengers.

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"The flight ban, made on the basis just of computer calculations, is resulting in billion-high losses for the economy," Lufthansa spokesman Klaus Walter was quoted as saying.

Nevertheless, European authorities will have to assess costs to the airline industry for themselves before any decisions on possible state aid to companies can be taken, the EU\’s Spanish presidency added in Madrid.

"We only have very preliminary estimates and the situation could soon change for the better," Spanish Finance Minister Elena Salgado told reporters after talks in Madrid between European Union and Asian-Pacific counterparts.

"It will therefore require an evaluation," she underlined, stressing that the Spanish EU chair has "no position" on suggestions that state aid will be required as with banks during the financial crisis.

"So far, no country has lodged any proposals to that effect," she stressed.

Commission official Francisco Fonseca, speaking alongside Salgado in Madrid, underlined that EU law on possible state aid to airlines is "very clear. In exceptional circumstances, the commission will study the situation, in its own time," he said.

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