Passenger demand fell by 5.6 per cent in January compared to the same month last year, a full percentage point worse than the decline recorded in December 2008, the International Air Transport Association (IATA) said.

The steep fall in air cargo also accelerated, demand dropping by an unprecedented 23.2 per cent year-on-year in January, compared to a drop of 22.6 per cent a month earlier.

”Alarm bells are ringing everywhere,” IATA chief executive Giovanni Bisignani said.

”The industry is in a crisis and we have not yet seen the bottom.”

”Every region's carriers are reporting big drops in cargo. And, aside from the Middle Eastern carriers, passenger demand is falling in all regions,” Bisignani added.

The biggest regional fall in passenger travel and air cargo again occurred in Asia.

Passenger traffic dropped 8.4 per cent in January despite the traditional boost for the Chinese New Year, while air cargo in the region fell 28.1 per cent.

IATA said the prospects for passenger traffic in Asia this year “remain dismal”, especially with the forecast economic slump in Japan, the biggest air travel market in the region.

North American carriers suffered a decline of 6.2 per cent in passenger travel, largely due to the fall in demand on trans-Pacific routes.

Bisignani maintained a forecast of a $US2.5 billion loss for the industry in 2009. The crisis has wiped $US35 billion off revenues, leaving airlines with a total of $US500 billion.