The airline business has lost confidence as uncertainty resurfaces about fuel prices and timing of a recovery.

Travel agents remain gloomy about prospects of a quick recovery, but some sectors of the aviation industry are reporting some moderation in traffic declines during the last two months.

The International Air Transport Associations’ business confidence index this month has dropped as airlines continued to fall in traffic volumes.

“Efforts to resize capacity to better match demand and cut costs have helped but have trailed behind the fall in traffic,” IATA said in its latest report.

“The expectations reported for the next 12 months have dipped into pessimism once more. Uncertainty around the timing of a recovery and the likely level of fuel prices compound the challenges facing airlines.”

Pessimism differed from market to market, with Asia more optimistic than others.  The low level of confidence was heightened due to May passenger numbers which has cast doubt that the full effects have bottomed out.

IATA reports that a stabilization in passenger kilometers flown have appeared due to a small increase in the average average distance flown and not due to leveling passenger numbers.

It is reported by IATA that the number of passengers flying business or first class was down by 23% in May, and travel between Europe and Asia had fallen by 26%.  The greatest fall in passenger numbers was in South America, which dropped by 62% due to the spread of swine flu.

“Premium travel numbers have now been in decline for 12 consecutive months,” the association said. “Economy travel numbers were also down by 7.6 per cent and total passenger numbers on international markets were down 9.2 per cent in May after a fall of 8.2 per cent in the first quarter.”

Quotes thanks to the Australian.  For more information on this article visit www.theaustralian.com.au