2010-04-18 17:37:23 - The clouds of volcanic ash from the Icelandic volcano which have settled over the UK are not only disrupting airlines and passengers.

Service industries relying on the revenue from tourism such as car rental businesses are starting to feel the knock-on effect as holiday flight cancellations continue to be disrupted by volcanic ash.

Rental car companies operating from holiday airports are suffering as travellers are unable to collect their pre-booked holiday rental cars due to flight cancellations.

The rental car industry in Spain and Portugal had been slowly recovering from the economic slowdown that lead to widespread rental car shortages during the Summer of 2009.

Matt May from Blue Valley Car Hire explains "this is the start of a busy time of year for tourism in Spain and Portugal, and the shortfall in revenue for the car rental companies caused by the flight cancellations will not be welcome. The situation is difficult for the local car rental businesses in tourist resorts around Spain and Portugal which lease cars for the busier periods. These cars will

now be parked up, waiting for the return of tourists from Northern Europe."

The situation is likely to lead to higher summer vehicle hire prices as companies look to recover the shortfall in income. With no immediate sign of an end to the ash clouds, the car rental industry is bracing itself for more customer cancellations and no-shows.