Ash cloud clears, Australia flights resume

CANBERRA (Reuters) - Australian airlines struggled to move a backlog of tens of thousands of passengers on Wednesday after an ash cloud from a Chilean volcano, which had grounded flights across the country's eastern and southern states, cleared.

The ash cloud has circled the earth twice to disrupt Australian airlines for a second time, costing Qantas an estimated A$20 million before the latest disruptions and the tourism industry more than A$15 million in two weeks.

Australia's Bureau of Meteorology's Volcanic Ash Advisory Center said long-term modeling suggested the ash cloud would not pass over Australia for a third time and disrupt airlines.

Volcanic ash can be extremely dangerous to aircraft and cause engine failure or engine damage.

Qantas said it had resumed flights from Melbourne and Sydney, the country's two main terminals, while Virgin Australia had also resumed flights. Qantas low-cost subsidiary Jetstar and discount carrier Tiger Airlines were all also gradually resuming flights.

"There's possibly some hope that Thursday will start to return to normal," said Civil Aviation Safety Authority spokesman Peter Gibson.

The majority of international carriers continued flights to and from Australia on Wednesday, with airlines including Singapore, Thai, Etihad and Emirates landing in Sydney.

A volcano in Chile's Puyehue-Cordon Caulle chain erupted on June 4 after lying dormant for decades, the latest eruption to hit international travel.

Iceland's most active volcano at Grimsvotn sent a thick plume of ash and smoke 15.5 miles into the sky last month, disrupting air travel in northern Europe.

The eruption of another Icelandic volcano in April 2010, Eyjafjallajokull, led to 100,000 canceled flights, affecting 10 million people at a cost of $1.7 billion.

Australia's Transport Minister Anthony Albanese said the disruption would impact the economy, already hit by natural disasters that cut 1.7 percent from growth during the first three months of this year, the biggest decline in 20 years.

"Having that disruption to international services means lower revenue in terms of tourism and in a country such as ours, where we rely on aviation to connect each other and to the world, there is a bigger economic cost," he said.

Air New Zealand domestic flights operated as scheduled on Wednesday, while Jetstar in New Zealand said on Tuesday it would cancel all New Zealand domestic flights until midday Wednesday.

Andrew Tupper from the Australian Bureau of Meteorology's Volcanic Ash Advisory Center, said it was unlikely the ash cloud would make a third journey round the globe.

"The volcano is still erupting but not at the same levels," he said. "It is very unusual for ash clouds to do two circuits."

"The last time volcanic ash circled the globe in the southern hemisphere was in 1991."

(Reporting by Rob Taylor in CANBERRA and Michael Perry in SYDNEY; Editing by Ed Davies and Robert Birsel)