Airline industry earnings for the three months through June suffered the first year-to-year decline in two years as oil prices rose, the International Air Transport Association said. Early figures for 16 carriers showed operating profit shrinking by one-third and net income tumbling by almost two-thirds, the Montreal- and Geneva-based industry group said on Wednesday in a report. North America, the Asia-Pacific region and Latin America are all showing declines.European earnings advanced only because traffic disruptions caused by a volcanic-ash cloud crimped profit last year.“The whole airline sector is under the cosh right now,” Joe Gill, an analyst at Bloxham Securities in Dublin, said in an interview. “The airlines are massive consumers of fuel, and they will ultimately respond by cutting capacity.’Air France-KLM Group, Europe’s biggest carrier, tumbled the most in almost 18 months in Paris trading on July 28 after posting a second-quarter operating loss of 145 million euros ($207 million), counter to analysts’ estimates that it would report a profit.Earnings at Deutsche Lufthansa and Singapore Airlines also failed to meet analysts’ predictions.Passenger traffic is still rising at a 4 percent to 5 percent annual pace, IATA said. At the same time, jet-fuel prices headed above $130 a barrel in July, while airline capacity increases are outpacing demand, resulting in June load factors, or seat-occupancy levels, that were 1 percentage point below 2010’s high, the group said.A deterioration in consumer confidence and the economic outlook in the past month will put third-quarter earnings under further pressure, with a possible slowdown in business travel, which has so far spurred traffic in 2011, posing a ‘‘worry,” IATA said.The 31-member Bloomberg World Airline Index has slumped 4.8 percent this week, falling to the lowest in more than a year. Declines in 2011 have been led by Thai Airways International Pcl, Air France-KLM and Delta Air Lines.Airline share prices have fallen by about 15 percent this year because of economic concerns, IATA said.A slump in demand may prove to be a catalyst for oil prices to fall, giving stronger airlines an opportunity to buy fuel at lower costs, Bloxham Securities’ Gill said. About 30 percent of an airline’s costs come from fuel. from / Arabian Business News