By Laura MacInnis
GENEVA (Reuters) - International air cargo and passenger traffic fell sharply in September, in a sign airlines and exporters are both in "dramatically difficult" straits, the International Air Transport Association (IATA) said on Friday.
IATA also repeated its forecast that airlines would lose $5.2 billion in 2008, warning that falling demand and financing problems had eclipsed the benefits of lower oil prices.
"The industry crisis is deepening along with the crisis in the global economy," said Giovanni Bisignani, head of the group that represents 230 airlines including Alitalia
Cross-border air freight -- a leading indicator for the health of world trade -- was 7.7 percent lower last month than in September 2007, in the biggest monthly drop since the dot-com bubble burst in early 2001, IATA said.
Asia-Pacific carriers reported a 10.6 percent year-on-year decline in air cargo, while European air freight traffic fall 6.8 percent and in North America it shrunk 6.0 percent.
Fewer people also opted to fly internationally in September, the month when financial market turmoil dominated headlines worldwide, according to the IATA data which excludes domestic flights.
The 2.9 percent year-on-year drop last month was the first decline recorded since the SARS epidemic in 2003, when the previously unknown respiratory ailment spread through air travel from Asia to Canada and elsewhere.
Latin America was the only region that saw an increase in passenger traffic last month, with demand up 1.7 percent.
Bisignani told journalists on a conference call the airline sector could be even further pressed in October, given the intensification of the global financial crisis in recent weeks.
"The worst is likely still to come," he said. "We will have a very difficult year."
Air France-KLM
IATA said that many carriers could face trouble finding financing for planes in the year ahead, noting that many of the big banks that previously extended plentiful credit to the industry have scaled back that activity.
And although the price of crude oil has fallen more than 50 percent from its peak above $147 a barrel in July, many airlines are still suffering because they had hedged themselves against fuel prices at higher levels, according to Bisignani.
More than 30 airlines have suspended operations or shut down in the last year, and IATA has about 20 more on a "watch list" because of their fragile finances, he said, without identifying any by name.
