Fears that the latest volcanic eruption in Iceland could cause airline fleets to be grounded as an ash cloud spreads towards Europe have caused shares in the largest carriers to drop. Flights in and out of Scotland have already been cancelled and the Civil Aviation Authority has warned airlines to be prepared for further disruption.

IAG, the company formed by the merger of British Airways and Iberia, saw shares fall by around five percent, as did easyJet. KLM and Air France shares were down by around 4.5 per cent. In April last year, the eruption of the Eyjafjallajokull volcano resulted in an ash cloud which forced governments across Europe to enforce the closure of airspace.

The situation lasted for nearly a week; left thousands of passengers stranded and cost the airlines £1.1 billion. Experts have said that they do not think the eruption of the Grimsvotn volcano, which began on Saturday, would cause anything like the disruption experienced in 2010 because the ash is heavier and will return to earth much more quickly.

However the reassurances failed to prevent shares in Germany’s Lufthansa dropping 3.5 per cent and a fall for Ryanair of 6.2 per cent. Airlines having cancelled Scottish services include British Airways, KLM, Flybe, easyJet, Eastern Airways and Loganair. The Foreign Office is advising travellers to stay in contact with their airlines or travel agents for updates on the situation.

Transport Secretary Philip Hammond said there were better systems in place for dealing with ash clouds now than there were a year ago, but warned that natural events such as volcanic eruptions were always likely to cause some disruption.