SYDNEY: A “perfect storm” of soaring fuel costs and slipping demand could cost global airlines $6.1 billion this year, the International Air Transport Association (IATA) said yesterday.

Painting a grim outlook for the industry, IATA’s Director General and Chief Executive Giovanni Bisignani said he expected to see more airlines go bust as sky-high fuel prices slash profitability. “We are in a perfect storm of uncontrollable fuel costs and falling demand,” Bisignani told the Australian National Aviation Press Club in Sydney.

“Airlines could lose as much as $6.1 billion this year. Already some 25 airlines in our financial systems have gone bust — greater than immediately following 9 11 — and we are bracing for more.” “Despite some relief in the oil price, we are a fragile industry that is in a crisis.” Since 2002, the price of oil has jumped from $25 a barrel to more than $140. It currently sits at about $110 but Bisignani said it could easily surge again on instability in Russia and the Middle East. He said the reality was that oil prices seemed to be permanently higher than five years ago and were “re-shaping the business in a way that demand shocks of SARS (Severe Acute Respiratory Syndrome) or 9 11 did not.”

IATA represents around 240 air carriers accounting for 94 percent of world air travel.

In June it dramatically slashed its industry profit forecast of $4.5 billion to a loss of $2.3 billion if oil averaged $106.5.

However, it said that figure could balloon to $6.1 billion if oil stayed at around $135 a barrel.

Since then, the body has announced that the number of people traveling by air was growing at its lowest rate in five years due to the world economic slowdown.

Global passenger traffic grew by 3.8 percent in June, the lowest level since 2003 when the industry was hit by the SARS crisis, it found.

On the issue of security, Bisignani said while advances had been made since the September 11, 2001 aircraft attacks on the United States, governments had failed to deliver.

“As every traveler knows, the system remains an uncoordinated mess because governments are not thinking or acting globally,” he said, adding that safety checks were often unnecessarily duplicated. He said while airlines had worked hard to cut costs to survive the tougher environment, they were not free to operate as normal businesses because airspace access and foreign ownership were controlled by governments.