JAKARTA/CANDI DASA, Indonesia – Bali’s rumbling Mount Agung is starting to impact the economy of the holiday island and, if the eruptions and volcanic ash clouds persist, could spark a bigger wave of cancellations by visitors to Indonesia’s main tourism destination as peak season beckons.

The relatively small island has an outsized importance for Indonesian tourism. In January-September, Bali received 4.5 million foreign tourist arrivals, nearly half of the 10.5 million arrivals in Indonesia.

Foreign tourist arrivals to the majority-Hindu island rose 26 per cent in the nine-month period on an annual basis, though dropped on a monthly basis in September, when Indonesian authorities first raised the warning alert on Agung.

“Bali is about tourism, nothing else. If it (the eruption) is prolonged for around 1-3 months, it will impact our tourism significantly,” said I Ketut Ardana, chairman of the Association of the Indonesian Tours and Travel Agencies (ASITA).

“We can feel a small impact now, the price of staple goods is increasing,” he said.

Indonesia closed Bali’s airport on Tuesday for a second day, stranding thousands of visitors due to the ash cloud. On Monday alone, it disrupted 445 flights that would have carried 59,000 passengers.

Chinese tourists have overtaken Australians to become the top visitors to Bali, representing around a quarter of arrivals in January-September. Australian and Japanese tourists are the second- and third-largest groups.

Foreign tourists spent about $1,100 on average during Indonesia holidays in 2016, according to tourism ministry data.

President Joko Widodo has been trying to promote creation of 10 “new Balis” in other parts of the scenic Indonesian archipelago. But for many so far, holidaying in Indonesia means going to Bali.

ECONOMY STUCK IN SLOWER GEAR

As Agung spewed tall columns of ash, life continued largely as normal on Tuesday for villagers near the volcano who set up traditional markets and offered Hindu prayers.

Matthew Smyth from Ireland, a restaurant owner in Amed, around 15 km (9 miles) from the volcano, said many businesses using rented land would be threatened if the eruption dragged on.”Half of the businesses here are built on credit… if the situation continues many people will lose their land,” said Smyth, who is also setting up a yoga retreat and freediving centre.

The problems facing Bali tourism come as Indonesian policymakers have been trying to fire up an economy stuck at around 5 per cent growth, held back by largely flat consumption.

Bali has been growing more quickly. The tourism sector was the biggest contributor to its 6.24 per cent regional GDP growth last year.

But Agung has already put a dent in Bali’s growth this year.

“If it (the eruption) is prolonged to a month, especially in Bali, it could have an impact on tourism revenue. I think this is a short-term shock, but it needs to be watched,” said Myrdal Gunarto, an economist at Maybank Indonesia in Jakarta.

Wayan Wirjana, 31, the manager of a restaurant in Candi Dasa, a popular beach town in Bali, said he was only getting five visitors a day, down from 15-20 in the summer, and expects the usually busy Christmas and New Year period to be slow.

“If things continue in the long term, like through the Christmas period, we’ll have to lay off staff even if temporarily. We all have families so there is a very real impact on us,” he said.

SINGAPORE – As a shutdown of Bali’s airport is extended due to volcanic ash, airlines bracing for millions of dollars of lost revenue per day are scrambling to minimise damage by offering travel to other destinations and alternative transport off the island.

The airport on the Indonesian tourist island was closed for a second day on Tuesday because of ash from the eruption of the Mount Agung volcano, which has already disrupted several hundred flights and tens of thousands of passengers.

With no immediate sign of the eruption ending any time soon, industry experts say airlines may consider making longer-term flight frequency adjustments to Bali as forward bookings collapse and risks of ash damaging aircraft linger.

AirAsia will look to redeploy capacity elsewhere in its network, the airline group’s chief executive Tony Fernandes tweeted on Tuesday, without providing details of any adjustment.

Most airlines are for now offering various options to minimise the short-term impact, preparing customers to expect scheduled disruptions until at least Dec. 4.

“If this situation is prolonged for 2 to 3 months, it is possible that the airlines could reduce their Bali flights in the upcoming northern summer schedule that starts from end-March,” said Corrine Png, chief executive of transport research firm Crucial Perspective, although she said they would be wary of losing airport slots when demand eventually returned.

Australia’s Jetstar is allowing passengers to re-route to other holiday destinations like Phuket in Thailand, while Singapore Airlines Ltd budget offshoot Scoot said it would transport stranded passengers by bus and ferry from Bali to the city of Surabaya on the neighbouring island of Java for flights back to Singapore.

Png said each day that the Bali airport was closed meant about $5 million in combined lost flight revenue for the 42 airlines that fly there.

“This comes at a bad time for the airlines as we are in peak travel season right now and the Bali route is highly lucrative,” she said.

“Forward bookings to Bali will collapse as a result and the airlines will have to re-deploy their excess capacity to alternative destinations which are less profitable and may even have to discount more to fill up their planes.” Alicia Seah, an official at Singapore-based travel agency Dynasty Travel, said bookings and inquiries for travel to Bali had dropped by half in the past two months following warnings that the volcano could erupt.

“Those departing this week and early December are asking for diversion to Thailand, Vietnam and Cambodia and we are now assisting them to do that. But those departing mid- to late-December are adopting a wait-and-see attitude,” Seah said.

FREQUENT ERUPTIONS

To be sure, volcanic activity is common in Indonesia and ash clouds have led to sporadic airport closures and cancellations of flights to and from Bali on at least six occasions over the last three years, often for days at a time.

But on those occasions, the volcano spewing ash was on a neighbouring island rather than Bali itself, making this a more serious threat to tourism.

Airlines avoid flying with volcanic ash in the air because it can cause significant damage to aircraft engines, clogging fuel and cooling systems, hampering pilot visibility and even causing engine failure.

In 1982, a British Airways 747 suffered severe damage and had all four engines flame out after flying through ash from Mount Galunggung in Indonesia.

Flight cancellations cost airlines in terms of refunds to passengers and paying fixed costs of aircraft and crew that are not flying, as well as for “relief” flights to return stranded travellers home.

Airline insurance usually covers physical damage to aircraft from ash but not the lost revenue, Png said.

In 2010, when a volcanic eruption in Iceland brought flights to, from and within much of Europe to a halt, the International Air Transport Association estimated airlines lost $1.7 billion in lost revenue in the first six days.

The ash cloud from the Bali volcano, however, is smaller and in an area far less frequented by major airline routes and it has for now been contained mostly to the airspace around Bali and neighbouring Lombok island, both of which are primarily tourist destinations rather than key business travel points.

The wind direction could change, pushing ash away from the airport.

An Indonesian disaster mitigation official said ash rose an estimated 20 km in 1963, during Agung’s last major series of deadly eruptions that lasted about a year.

Many airlines have decided to cancel their flights to Bali for several days since Monday’s temporary closure of I Gusti Ngurah Rai International Airport due to the eruption of Mount Agung on the resort island, kompas.com reported on Tuesday.

The airport authority closed the airport at 7:15 a.m. on Monday for 24 hours and then extended the airport closure for another 24 hours at 7 a.m. on Tuesday.

“It was decided to keep the airport closed until 7 a.m. [Wednesday], as the airport’s airspace is still covered by volcanic ash,” communications and legal division head Arie Ahsanurrohim at state-owned airport operator PT Angkasa Pura I (AP I) said on Tuesday.

On Monday, Singapore Airlines cancelled Bali-bound flights SQ938, SQ939, SQ942, SQ943, SQ946, SQ947, SQ948, SQ949, MI176 and MI175.

The airline announced that passengers who had bought tickets before Monday for its Bali flights flying between Nov. 27 to Dec. 4 could reschedule their flights or get a refund.

Malaysia Airlines has cancelled all its Bali flights since Monday, saying that it would recommence flights on the Bali route when it was possible.

Thai Airways has cancelled all Bali flights from Monday to Saturday. The airline is allowing ticket holders of flights from Nov. 26 to Dec. 10 to reschedule their flights.

Meanwhile, AirAsia cancelled all its Bali flights from Nov. 25, with current ticket holders permitted to reschedule their flights within 30 days at no additional cost.

Other airlines that have cancelled their Bali flights include EVA Air, Cathay Pacific, Jetstar, Qantas and Virgin Australia.

International convenience store chain 7-Eleven has launched its own cosmetics line to be sold in stores worldwide.

The brand, Simply Me Beauty, features an impressive range of products, including mascaras, blush, concealers, BB creams, lip crayons and much more – all under US$5 each.

While the move may seem unexpected, it is not unusual for drugstores to sell makeup products alongside food, drinks and essential skincare products, all under one roof.

7-Eleven said that the new cosmetics line is a response to rising demand from millennial women.

“The beauty industry has seen a dramatic growth of cost-conscious cosmetics in the marketplace, because millennial women are looking for a variety of colors at affordable prices,” said Lindsay Robertson, 7‑Eleven product development category manager.

“They like to buy and try, and our goal when developing the Simply Me Beauty line was to create a line of makeup that had a quality look and feel without a high price barrier.”

Simply Me Beauty has been stocked in select stores in the United States as of Nov. 21 and will soon be available across the globe.

Unfortunately, Indonesian consumers won’t have access to the line as the local arm of 7-Eleven closed all its outlets across the country at the end of June.