Airlines 'shrinking by all measures' - report

Airlines 'shrinking by all measures' - report

Air and cargo traffic fell off in November as airlines face 'chronic crisis.'

GENEVA, (Reuters) -- International airlines saw a huge 13.5% fall in cargo traffic in November and a drop of 4.6% in passengers as business shrank across the industry, the carriers' grouping IATA said on Tuesday.

The figures, reflecting what IATA has dubbed a "chronic crisis" with revenues tumbling and hundreds of thousands of jobs at risk, marked the sharpest declines since the months after the September 2001 attacks in the United States.

"The 13.5% drop in international cargo is shocking," said Giovanni Bisignani, Director General of the body, the International Air Transport Association which represents airlines operating 93% of cross-border flights.

"As air cargo handles 35% of the value of goods traded internationally, it clearly shows the rapid fall in global trade and the broadening impact of the economic slowdown," he declared.

"The industry is now shrinking by all measures."

Although airlines had cut flight numbers by 1% in November in anticipation of falling demand, the actual drop in passengers had left planes operating with nearly 27% of seats empty against only 24% in November 2007.

"We can expect deep losses in the fourth quarter," said Bisignani, who earlier this month forecast that total balance sheet deficits in 2008 of its some 230 members across the globe would reach $5 billion by the end of the year.

The November figures, issued from IATA's Geneva headquarters, showed airlines in the Asia-Pacific area -- which accounts for nearly 45% of global air freight -- seeing the largest regional cargo traffic drop, a whopping 16.9%.

Asia-Pacific, which includes the previously rapidly expanding China market, saw a decline of 9.7% in passenger numbers, also more than any other of the six world regions that IATA reports on separately.

Carriers in North America -- which includes the United States, Canada and Mexico -- saw a decline of 14.4% in cargo a 4.8% in passengers, the last, IATA said, reflecting the near-collapse of the investment banking sector.

Europe recorded an 11% slump in cargo and 3.4% in passengers as the major markets for its airlines -- intra-continental, the North Atlantic and Asia -- all sunk deeper into economic woes.

At the start of December, IATA forecast that industry losses in 2009 were likely to total some $2.5 billion, despite a boost from falling oil prices after the hike in the middle of 2008 which had hit carriers hard.

Commenting on the Tuesday figures, Bisignani did not suggest any revision of that prediction.

But he said the overall economic gloom reflected by the November statistics would carry over into the coming year. "The industry is back in intensive care. Improved efficiency everywhere will he the theme for 2009," he declared.

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