IATA warns airline industry dangerously poised

London: Pointing out that the international air traffic fell for a second month in a row in October the International Air Transport Association (IATA) warned Thursday that the airline industry was dangerously poised.

International passenger traffic, measured in revenue passenger kilometers (RPKs), which factor in how far passengers are flown, fell 1.3% from a year earlier in October, a less-steep decline than the 2.9% drop in September, IATA said.

"The gloom continues and the situation of the industry remains critical," said IATA director general Giovanni Bisignani. While the drop in oil prices is a relief to airlines, Bisignani said, "recession is now the biggest threat to airline profitability. The slight slowing in the decline of passenger traffic is likely only temporary."

The load factor for October was 75%, about two percentage points lower than last year.

It also pointed out that the international air-freight traffic contracted 7.9% in October, the fifth consecutive month of steep drops. "The deepening slump in cargo markets is a clear indication that the worst is yet to come," Bisignani added.

A sharp drop in Asian-Pacific exports impacted the region's international freight traffic, which fell 11%. The Asian-Pacific region accounts for 45% of the international cargo market.

Latin American carriers saw the largest decline, 11.4%, IATA said.

Even as most carriers posted declines in passenger traffic, European airlines bucked the trend with traffic showing a 1.8% growth in October.

Asian-Pacific carriers, which represent 31% of global international passenger traffic, saw passenger traffic fall by 6.1%, an improvement from the 6.8% decline reported for September. IATA said capacity reduction of 2.3% wasn't enough to keep pace with waning demand, and as a result load factors for the region's carriers fell to 72.2%.

Africa saw the largest decline, with international traffic dropping 13% in October. It is the only region where traffic weakened from September.

Faced with a global economic downturn, IATA also urged that policy makers should look at imparting efficiency to the industry. "Policy makers must also understand that change is needed in air transport. Unlike the finance industry, airlines are not asking for handouts. Commercial freedom, efficiency and a fair treatment in taxes are needed," Bisignani said.

IATA represents about 230 airlines, comprising 93% of scheduled international air traffic.