UPDATE 1-Dutch to allow passenger flights on Monday

AMSTERDAM, April 19 (Reuters) - Passenger flights will be allowed to take off from Schiphol Airport in Amsterdam from Monday night as part of the European Union's decision to start reopening European airspace, the Dutch Transport Minister said.

'We are taking the lead on this,' Transport Minister Camiel Eurlings said. 'But from tomorrow there will also be lots of other airports that will start allowing flights.'

The European Union had earlier reached a deal to cut the size of the no-fly zone caused by a cloud of ash from an Icelandic volcano, under pressure from frustrated airlines losing $250 million a day.

Eurlings said flights would resume only in daylight and with reduced capacity to ensure safety.

KLM Chief Executive Peter Hartman said the first flights would depart from Amsterdam before nightfall on Monday to allow for visual flying, with the first flight to take off as early as 1800 GMT. Three planes will fly to New York, Shanghai and Dubai.

'Our criticism was not on the closure of the air space. Our criticism was that the airspace remained closed,' Hartman said. 'We are not adventurers ... we give no concession to safety.'

Earlier, the airline said most of European airspace was safe and two commercial flights freight flights on Sunday showed nothing out of the ordinary on inspection of planes. It also said it operated nine test flights on Sunday without problems.

The volcanic ash over Europe has clouded KLM's prospects just as it saw traffic recover. According to KLM, March passenger traffic was up year-on-year by 4.7 percent while cargo traffic was up 2.1 percent.

Schiphol saw an 8.1 percent drop in passenger numbers and a 17.9 percent slump in cargo volumes in 2009 as a result of the economic downturn but still remains Europe's third-largest cargo airport and the fifth-largest passenger airport.

Aviation body IATA pushed on Monday for European airspace to reopen and the European Commission said it may approve compensation for airlines losing $250 million a day.

(Reporting by Aaron Gray-Block and Greg Roumeliotis; editing by Andrew Roche) Keywords: EUROPE AIR/DUTCH/ ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.