The global economic crisis continued to reduce demand for international air travel in March, the International Air Transport Association (IATA) reported.

In a statement released Tuesday, the airline industry group said passenger demand fell to 11.1 percent in March from the year-ago level following a 10.1-percent drop in February and a 5.6-percent fall in January.

"Airlines cannot adjust capacity to match demand. Load factors have dipped sharply from last year. All of this is hitting revenues hard," said IATA director general and chief executive officer Giovanni Bisigniani. He added that international revenues in March may decline by as much as 20 percent.
 
Among the major regions, carriers in Asia Pacific continued to lead the decline with a 14.5-percent drop in passenger demand, outstripping a 9.3-percent downward adjustment in capacity. The region was particularly hit by the decrease in long-haul travel, which contracted faster than short-haul.

North American airlines saw a decline of 13.4 percent in international passenger demand as travel was further discouraged by unemployment and weak consumer confidence in the United States.

Carriers in Europe also suffered an 11.6-percent drop in demand, as well as those in Africa (-15.6 percent) and Latin America (-5.9 percent).

Airlines from the Middle East were the only ones which experienced growth in March, at 4.7 percent from 0.4 percent in the previous month. However, this was out of balance with the 13.1-percent increase in capacity.

Meanwhile, air cargo demand was relatively stable at -21.4 percent compared to March 2008, a slight improvement from -22.1 percent in February and -23.2 percent in January.

Swine flu

Bisigniani said the recent swine flu scare could have a significant impact on traffic. "It is still too early to judge what the impact of swine flu will have on the bottom line. But it is sure that anything that shakes the confidence of passengers has a negative impact on the business. And the timing could not be worse given all of the other economic problems airlines are facing.," he said.

Aside from swine flu, Bisigniani noted that airlines face many other challenges. “Like the rest of the economy, recovery in the air transport sector rests on a rise in consumer confidence and consumer spending. Shedding debt will be a major headwind."

Given this, he urged governments to move forward with liberalization, particularly of the archaic ownership restrictions that prevent cross-border access to capital and consolidation.

“Air transport is an economic catalyst and can play an important role in driving recovery, but only if we are financially sound. Access to global capital and the freedom to consolidate would go a long way to shoring up this industry—without government bailouts,” he said.