Iceland has raised its alert over the nation's largest volcano to red, banning all air traffic in the area, after detecting a small eruption.
A major explosion at the Bardarbunga volcano could signal a replay of the global travel chaos triggered when another peak blew four years ago, creating a massive ash cloud across Europe.
"There is an ongoing eruption beneath the glacial surface, probably a small eruption which has not been able to melt the ice-cap," Met Office official Theodor Hervasson said on Saturday.
British Airways is "keeping the situation in Iceland under close observation" and "at present, all of our flights are operating normally," it said. A Virgin Atlantic flight was rerouted away from the volcano as a "precautionary measure," spokeswoman Meigan Terry said. All other Virgin Atlantic flights were operating normally, she said.
SAS AB, Scandinavia's biggest airline, said it was monitoring the eruption and that it's hard to tell how serious the situation will become, according to a statement. American Airlines and United Continental each are monitoring the situation and haven't changed their schedules, spokeswomen from the two US carriers said.
"Right now airlines are like an expectant father in a maternity ward's waiting room," said Henry Harteveldt, founder of Atmosphere Research Group, a travel-industry consulting firm in San Francisco. "However, instead of waiting for a bundle of joy, they're waiting for an unwelcome volcanic eruption."
Icelandic authorities earlier this week evacuated tourists and hikers from the area around Bardarbunga, which kicked into seismic action on Monday with the biggest earthquake registered since 1996.
However, police said there was no sign of a change at the surface of the erupting area and that the ice layer was between 150 and 400 metres thick.
"The eruption is considered a minor event at this point," Icelandic police said. "Because of pressure from the glacier cap it is uncertain whether the eruption will stay sub-glacial or not."
The eruption of Eyjafjoell, a smaller volcano, in April 2010 caused travel mayhem, stranding more than 8 million travellers in the biggest airspace shutdown since World War II.
"There's nothing we can do if we get another big eruption like that of Eyjafjoell except to interrupt air traffic in the dangerous areas," Icelandic Civil Aviation Administration spokesman Fridthor Eydal was quoted as saying last week.
The volcano is located in south-east Iceland under the country's largest glacier Vatnajoekull.
The area around it is uninhabited, with only trekking cabins and campsites used by tourists and hunters in summer.
Iceland's second-highest peak, Bardarbunga rises to more than 2000 metres, and caps the country's largest volcanic system.
On Monday, seismologists recorded an earthquake of 4.5 on the Richter scale in the area.