So-called premium international traffic fell 13.3 per cent in December, compared to a year ago.

Despite a strong first half, total traffic for the year shrank 2.8 per cent over 2007.

Warning of darker days ahead, the International Air Transport Association (Iata) said the situation in Asia is especially worrying.

Traffic within the region fell 25.1 per cent, according to data released on Wednesday.

Between Asia and the United States across the Pacific, total traffic fell 19.7 per cent.

Explaining the higher-than-average slowdown in Asia, Iata said this is largely because of the importance of international trade and finance in driving business travel.

'The scale of this decline is consistent with the economic weakness seen in the region at the end of last year.'

Export volumes were down in December by 20 per cent in Singapore and by 35 per cent in Japan.

The overall drop of 13.3 per cent in the premium segment, compares with 5.3 per cent for economy class traffic.

With jobs being lost at a rapid rate and consumer confidence sinking, 'it seems that the bottom has not yet been reached for air travel and even weaker numbers may become evident in the first few months of this year', Iata said.

The 'extreme weakness of demand combined with an inability to shrink capacity to match' is causing fares and yields to decline, said the group which represents 230 carriers worldwide.

Iata estimates that in December, premium revenues fell 20 per cent, compared with the year before that.

Airlines are taking drastic measures to survive a business downturn not seen since Sars crippled the industry in 2003.

SIA announced earlier this week that it would ground 17 jets and slash capacity by 11 per cent in the coming financial year which starts April.

In some markets like Amritsar in India, and Vancouver, poor business has led to a decision to pull out altogether.

The airline has also started talks with its unions on cost-cutting measures including no-pay leave, shorter work months and pay cuts.