Andras Gergely and Avril Ormsby

DUBLIN/LONDON Tue May 4, 2010 5:24pm EDT

DUBLIN/LONDON (Reuters) -

Airspace over Scotland and Northern Ireland will be closed from early Wednesday because of volcanic ash that closed airports in Ireland on Tuesday and could threaten summer holiday travel.

Britain's aviation authority said airports in northwest England and north Wales could also be affected by the ash from an Icelandic volcano which brought chaos to European air travel last month.

Forecasts showed the concentration of ash in the atmosphere exceeded recommended safety levels, it said.

"The situation is very dynamic, so passengers expecting to travel from the impacted airports should contact their airlines to check whether their flight is operating," the Civil Aviation Authority said on its website.

Airspace over Scotland and Northern Ireland will be closed from 0600 GMT and airports in the two regions are also expected to close. A further update is expected about midnight on Tuesday.

Airports in Ireland and parts of Britain were closed for a number of hours on Tuesday.

The latest disruption was caused by ash being blown from the same volcano in Iceland that caused mayhem for 10 million travelers last month.

The Irish Aviation Authority (IAA) closed airports from 0600 GMT to 1200 GMT due to the risk of ash ingestion in aircraft jet engines, although overflights of Ireland from Britain and continental Europe were not halted.

It was the first test of a European system of progressive closures, including partial no-fly zones, introduced after the abrasive ash cloud prompted a blanket ban that was criticized by airlines forced to ground thousands of flights in April.

European transport ministers have agreed to set safety limits for flying through the ash, which can paralyze jet engines, and to unify European airspace.

Air traffic control agency Eurocontrol said the six-hour closures resulted in the cancellation of 150 flights, but that flights then returned to normal.

The IAA said northerly winds forecast for the coming days could bring more clouds of ash from the Icelandic eruption and disruption for passengers this week.

"We could be faced with this periodically during the summer," IAA Chief Executive Eamonn Brennan said. "We are probably facing a summer of uncertainty due to this ash cloud."

EARNINGS HIT

Much of European air traffic was grounded last month because of the spread of ash from an erupting volcano under the Eyjafjallajokull glacier in Iceland. Some 100,000 flights were canceled and millions of passengers stranded.

Britain's easyJet warned of some disruption on flights to and from Scotland on Wednesday.

Last month's airspace closures cost Europe's airlines 1.5 billion to 2.5 billion euros ($2 billion-$3.3 billion), the European Commission has estimated.

The International Air Transport Association said European carriers would bear the brunt of global industry losses which it has estimated at $2.8 billion this year.

It also said IATA airlines faced just under 200 million euros in food and hotel costs for stranded passengers. Airlines have been battling to get some relief from governments.

But the EU transport ministers meeting on Tuesday rejected financial aid for airlines.

The EU's executive had proposed deferring certain air traffic control charges but the move drew worries from some countries over unfair competition.

Former Irish state airline Aer Lingus said that last month's shutdown of several days cut its earnings by about 20 million euros ($27 million). The final bill will hinge on the impact on passengers' longer-term travel plans. Shares in Aer Lingus, which also separately reported encouraging first-quarter trading on Tuesday, were down 5 percent in late trading, while Ryanair, which is much less dependent on the Irish market, was down 2.4 percent.

Air France-KLM, British Airways, Iberia and Lufthansa were all down between 4 and 5 percent in a weak market because of the possibility of further chaos.

(Additional reporting by Marie-Louise Gumuchian in Dublin, Michael Holden and Caroline Copley in London, Philip Blenkinsop in Brussels, Tim Hepher in Paris and Maria Sheahan in Frankfurt; Editing by Charles Dick)