The International Air Transport Association (IATA) has released international traffic data for August that confirmed a continuing downturn.

International passenger demand growth slowed to 1.3%, following disappointing growth of 1.9% in July.

Passenger load factors fell to 79.2% a sharp drop-off from the 81% recorded during the same period last year as capacity growth outpaced demand.

Giovanni Bisignani, IATA's Director General and CEO said, "Passenger traffic grew 5.4% in the first half of the year. That slowed to 1.9% in July and 1.3% in August. The contrast between the first half of the year and the last 2-months is stark."

"The slowdown has been so sudden that airlines can't adjust capacity quickly enough. While the drop in the oil price is welcome relief on the cost side, fuel remains 30% higher than a year ago. And with traffic growth continuing to decline, the industry is still heading for a US$5.2-billion loss this year."

Asia Pacific carriers reported a 3.1% contraction, following a 0.5% decline in July. Economic distortions surrounding the Olympics in China and a weakening Japanese economic outlook contributed to the decline.

While some recovery in this weak performance is expected in coming months, clearly the region's economies are feeling the impact of the turmoil in the financial markets.

Middle Eastern carriers saw traffic growth drop to 4.3% following 5.3% in July and well below the 10.6% growth recorded during the first 6 months of the year.

In contrast, international passenger traffic carried by North American airlines accelerated from 4.2% growth in July to 5.2% in August, in Latin America from 8.1% to 11.9% and in Europe from 1.3% to 1.6%.

August is usually the second strongest month of the year, but the 79.2% load factor achieved was 1.8% points lower than last year although scheduled capacity is planned to slow very sharply to the point where it barely grows by the end of the year.

Bisignani said, "The industry crisis is deepening and no region is immune. Urgent measures are needed. From taxation to charges and operational efficiencies, all areas impacting the business must be examined for ways to reduce costs and drive efficiencies. It's a matter of survival."

Bisignani noted significant progress in Brazil where a Presidential approval for the removal of a fuel tax for international flights was published on September 26.

Bisignani said, "After a 2-year campaign, this is great news and the US$411-million savings over the next 4-years could not be better timed.

"The challenge is for other governments to follow Brazil's example, conform with global standards and free the industry of crazy taxation.

"This is particularly true of India. Its carriers will post the largest losses outside of the US - USD1.5-billion this year - and they are being crippled by enormous taxation on fuel, particularly in domestic markets."