November 4, 2014 / 12:21 PM / 5 years ago

UPDATE 1-Slowing economies, sanctions hurting Europe air travel - IATA

* Global passenger demand up 5.3 pct in Sept vs 6.3 pct in Aug

* Europe growth 3.9 pct in Sept vs 7 pct in Aug

* Asia, U.S. underpinning profitability of industry

* Falling oil prices may signal difficulties ahead (Recasts, changes dateline to BERLIN from FRANKFURT, adds comments from IATA, European Commission forecasts)

BERLIN, Nov 4 (Reuters) - Weaker European economies and the ongoing Russian sanctions are affecting demand for air travel in the region, while the fall in oil prices will take time to be felt and may even signal difficulties ahead, a leading industry body said.

Global air traffic demand rose 5.3 percent in September, slowing down from a 6.3 percent rise recorded for August, the International Air Transport Association (IATA) said in its monthly passenger traffic statement.

“There are a lot of risks out there - growing weakness in key economies such as Europe and Brazil, the potential threat of Ebola to public confidence in flying, and the impact of political instability in various parts of the world,” IATA Director General Tony Tyler said.

Lower jet fuel prices, which make up around one-third of the cost base of airlines, would take time to filter through due to hedging strategies, IATA said.

“And it could even be an indicator of difficulties ahead if the fall is driven by declining demand for oil rather than rising supply capacity,” Tyler said.

All regions reported growth in demand in September and the overall load factor increased 0.2 percentage points to 80.3 percent, but growth is shifting, the association said.

In Europe, growth slowed to 3.9 percent from 7 percent, reflecting a two-week strike by Air France pilots and weakening economic prospects.

Lufthansa, Europe’s largest airline by revenue, last week cut its 2015 profit target due to the weaker economic outlook, including in Germany, its home market and Europe’s largest economy.

The European Commission said on Tuesday that the euro zone will need another year to reach even a modest level of economic growth, revising down its forecasts and predicting more low inflation and high joblessness.

In Russia, domestic demand slowed to 5.6 percent in September from 10.1 percent in August in what IATA said could be the first sign of an economic slowdown owing to the Russia-Ukraine crisis and ensuing EU sanctions.

“The positive economic developments in Asia and the US continue to underpin profitability. But it is a delicate balancing act,” Tyler said.

IATA currently forecasts that global airlines will deliver $18.0 billion net profit on revenues of $746 billion, giving a net profit margin of 2.4 percent in 2014.

It said it will provide an update on this forecast and provide a first outlook for 2015 on Dec. 10. (Reporting by Victoria Bryan; Editing by Kirsti Knolle and Maria Sheahan)

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