The ash cloud could cause Europe's tourism sector losses of up to one billion euros, according to a preliminary estimate by the European Commission this week.
Observers in Iceland expect a fifth of all pre-booked trips to the island to be cancelled.
"If we do not see any changes in the volcanic activity, we might see up to 20 percent cancellations in pre-booked trips to Iceland. That could very seriously affect Iceland's tourism industry," Gunnar Borgthorsson, the marketing director at the Icelandic Tourism Board, told AFP.
The volcano, he warned, will be far more damaging to Icelandic tourism than the economic crisis, which actually served to boost the industry, since lower prices have attracted foreigners as financially-strapped Icelanders have increasingly been forced to holiday at home.
"Travellers are well aware now that despite the financial crisis, Iceland is still functional," Borghorsson said.
"But this crisis is of another kind and has not only effects on Iceland. This volcanic eruption has had very serious effects on the tourism in Europe and people have lost their faith in air transport. That is something we must correct," he insisted.
Source-AFP
RAS