More turmoil is forecast for the world’s air carriers as the continued slump in demand for travel amid the recession and rising fuel prices force major players, including Delta Air Lines and American Airlines, to further reduce the number of unprofitable flights they conduct.

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The route terminations come on top of U.S. capacity cuts over the past year aimed at offsetting the soaring fuel prices of last summer and the subsequent onset of the economic downturn.

Other difficulties include the impact of the swine flu pandemic on travel to and from Mexico. Lower demand for passenger seats has set off ticket sales even during the busy summer travel season, a crucial time for industry earnings. While retaining leisure travelers flying on deeply discounted tickets, business travelers continue to stay away.

Delta will scale back its foreign routes by 15 percent by the end of the year. Combined with a six percent cut in domestic capacity, the major air carrier’s total capacity will be ten percent smaller than it was a year ago.

American will trim capacity in the second half of 2009 by an additional two percent, allowing overall capacity to slip nearly eight percent by the end of 2009, as compared with a year earlier.

Delta and American are not alone in cutting out money losing routes and parking fuel guzzling aircraft. Continental Airlines and Southwest Airlines both said they will eye traffic over the next several months before deciding whether to cut additional capacity.

The move by the two U.S. legacy air carriers comes as no surprise as global airlines say they are awash in red ink.

The world’s airlines are expected to lose $9 billion in 2009 amidst warnings that the economic problems would continue for some time.

The forecast by the International Air Transport Association (IATA) was significantly worse that the trade group’s projection in March, which estimated a loss of $4.7 billion for 2009. The airlines are also expected to post an unprecedented 15 percent revenue drop that will see industry revenues shrink by $80 billion to $448 billion. (IATA also revised its loss estimate for 2008 to $10.4 billion from the previous estimate of $8.5 billion.)

The dire predictions were offered by Giovanni Bisignani, IATA’s director general and CEO at the 65th Annual General Meeting (AGM) held in Kuala Lumpur, Malaysia last week.

“There is no modern precedent for today’s economic meltdown. The ground has shifted. Our industry has been shaken. This is the most difficult situation that the industry has faced,” said Bisignani.

Carriers in all regions are expected to report losses this year. Air carriers in the Asia-Pacific region are expected to post the largest losses---$3.3 billion---as Japan remains mired in recession and economic growth in China and India slow, the international trade association said. U.S. airlines are forecast to lose only $1 billion this year---an improvement over the $5.1 billion deficit in 2008---when they were battered by soaring fuel prices. Meanwhile, European airlines are expected to lose $1.8 billion.

Just released Department of Transportation (DOT) passenger figures confirm the downward trend in the passenger count.

The total number of scheduled domestic and international passengers on U.S. airlines this past March declined by 9.1 percent from March 2008, dropping by 6.1 million to 61.0 million, according to the DOT’s Bureau of Transportation Statistics (BTS). It said March was the 13th consecutive month with a decrease in passengers from the prior year.

BTS reported that U.S. airlines carried 8.6 percent fewer domestic passengers than in March 2008. International passengers on U.S. carriers decreased 12.3 percent, the largest year-to-year decline since December 2001.

For the first three months of 2009, the number of scheduled domestic and international passengers on U.S. airlines declined by 10.3 percent from the same period in 2008, dropping to 162.6 million, 18.7 million fewer than a year earlier.

American carriers transported 10.4 percent fewer domestic passengers and 10 percent less international passengers in the first three months of 2009 than during the same period in 2008.

U.S. carriers operated 2.3 million domestic and international flights in the first three months of 2009, 8.7 percent fewer than were operated during the same period in 2008. Domestic flights decreased 9.0 percent from the previous year while international flights were down 61 percent.

In March, U.S. airlines operated 818,000 scheduled domestic and international flights, down 6.5 percent from the number of flights operated in March 2008. The number of domestic flights decreased 6.6 percent in March from a year earlier while international flights were down 5.6 percent.

Revenue passenger miles (RPMs), a measure of the number of passengers and the distance flown, were down 11.0 percent in the first three months of 2009. In March, RPMs were down 10.9 percent.

Available seat-miles (ASMs), a measure of airline capacity using the number of seats and the distance flown, were down 8.8 percent in the first three months of 2009. In March, ASMs were down 7.6 percent.

Passenger load factor, passenger miles as a proportion of available seat-miles, was down 1.9 load factor points at 75.3 percent in the first three months of 2009. In March, load factor decreased 3.0 load factor points to 79.3 percent.

Among U.S. airlines, Southwest carried 23.1 million passengers on its system in the first three months of 2009, the most of any airline. In March, Southwest carried 9.0 million passengers on its system, the most of any airline.

Among American airports, Atlanta Hartsfield International was the busiest in the first three months of this year, with 9.6 million total passenger boardings on U. S. carriers. The total included 8.6 million domestic passenger boardings in the first quarter of calendar year 2009. In March, the Georgia airport saw 3.1 million domestic passenger boardings.

American Airlines carried 4.7 million international passengers in the first three months of 2009, the most of any U.S. airline. It transported 1.6 million international passengers in March alone.

Miami International was the busiest U.S. airport for international travel on U.S. carriers in the first three months of 2009, with 1.2 million international passenger boardings. That included 413,300 international passenger boardings in March.

Separately, Boeing trimmed its global outlook for aircraft demand, saying it now expects 29,000 new passenger aircraft and freighters worth $3.2 trillion to be ordered worldwide in the next 20 years, down from its forecast of 29,400 a year ago. It blamed the economic downturn and softening demand for regional jets for the expected drop in total aircraft sales.

"While the commercial aviation industry is facing a significant downturn, it is cyclic and has a long history of declines and upturns," said Randy Tinseth, vice president of marketing, Boeing Commercial Airplanes. "Over the past 30 years, through both tough and good times, traffic growth has averaged more than five percent per year, demonstrating the resilience of the market. The long-term outlook points to the next 20 years as being a time in which we see fundamental underlying factors supporting a strong need for new airplanes."

Boeing analysis shows that over time, the commercial airplanes market will stabilize and economic growth will return. Boeing expects passenger traffic to grow at an average rate of 4.9 percent each year for the next 20 years.

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