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20 More Airlines Could Fail - IATA

October 3, 2008 | Chris Payatagool

By Nguyen Dieu Tu Uyen and Chan Sue Ling

Sept. 30 -- Global airline passenger traffic- growth slowed in August to the weakest pace in almost five years as the financial crisis hurt travel demand.

Worldwide traffic grew 1.3 percent in August, lower than the 1.9 percent pace in July, the International Air Transport Association said in an e-mailed statement released in Hanoi, Vietnam today. The growth matched the pace in September, 2003, the year when SARS hit travel demand in Asia, according to data compiled by Bloomberg.


As many as 28 airlines have gone out of business globally and a further 20 are at risk of a failure as travel demand wanes, IATA's Chief Executive Officer Giovanni Bisignani said today. Carriers worldwide are cutting jobs and grounding planes to help counter a 30 percent surge in jet-fuel prices in the past year, which will lead to a combined $5.2 billion loss this year.

``The slowdown has been so sudden that airlines can't adjust capacity quickly enough,'' Bisignani said in the statement.

Seat occupancy rates, or load factor, dropped to 79.2 percent in August, 1.8 percentage points lower than a year earlier, IATA said.

Air-Freight Traffic

Global freight traffic contracted 2.7 percent in August, the third consecutive monthly slide, as carriers in Asia Pacific flew less cargo, said IATA, whose members account for 93 percent of international air traffic. Freight shipped by Asia-Pacific carriers accounts for about 45 percent of the global air-cargo market, it said.

``The three-month decline, led by weakness in Asia-Pacific markets, is a clear indication that global trade is slowing down,'' Bisignani said. ``This shows that the impact of the financial crisis is broad geographically and will worsen before it gets better.''

The slowdown in global traffic last month was led by the Asia-Pacific region, where carriers reported a 3.1 percent contraction in passenger demand, IATA said.

``Economic distortions surrounding the Olympics in China and a weakening Japanese economic outlook contributed to the decline,'' the statement said.

For more information on the crash of the commercial aviation and telepresence see our timeline of Airline Bankruptcies, Mergers, Acquisitions, and Fiascoes

[via Bloomberg]

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