Growth in global passenger traffic showed "significant slowing" in August while the contraction in the freight market accelerated.

Figures from IATA for August 2011 show that passenger traffic recorded growth of 4.5% compared with the same month a year earlier, however, this was 1.5% below the year-on-year growth shown the previous month.

The air cargo market shrank by 3.8% - more than double the 1.8% contraction in July.

Tony Tyler, IATA director general and chief executive, said: "Airlines are bracing for tough times ahead. Economic uncertainty owing to the European sovereign debt crisis and the growing likelihood of a protracted period of slow growth in developed economies mean the industry will be even more focused on reducing costs and improving efficiency."

He warned that the industry was unlikely to see "improved conditions any time soon".

Global passenger capacity grew 4.6% with passenger load factor at 81.4%, said IATA. The international market saw a growth of 6.2% in passenger traffic and a 6.6% increase in capacity compared with August 2010.

The domestic passenger market showed a 1.5% growth over the previous year, outpacing a capacity increase of 1.3%.

In the cargo market, international freight traffic declined 3.5% against a capacity increase of 2.4%. Domestic freight traffic fell 5.7% while capacity declined by 1.8%. Overall, utilization on freight markets has declined by 4 percentage points since the second quarter of 2010.

Total industry profits are expected to fall from $6.9 billion in 2011 to $4.9 billion next year, it said.

Source: Air Transport Intelligence news