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Air Traffic Demand Improving, Profit Far Away - IATA

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Air traffic demand is recovering from the steep slump caused by the global recession but the airline industry remains well away from a return to profit, the International Air Transport Association (IATA) said Tuesday.

The IATA data added to news which has suggested the global economy was slowly recovering from the deepest recession since World War Two.

"Demand continues to improve, but profitability remains ever distant," said Giovanni Bisignani, IATA's Director General, in a statement. "Fares have stabilized, but at profitless levels. Meanwhile cost pressures are mounting from reduced aircraft utilization and rising oil prices," he said.

Airlines carried 9.6 percent less cargo in August year-on-year, while passenger demand fell 1.1 percent, said IATA which represents 230 airlines comprising 93 percent of scheduled international air traffic.

Demand was well off the lows hit earlier in the recession, IATA said. Freight levels were 12 percent above the low-point hit in December 2008 and passenger demand was 6 percent higher than the low in March 2009.

Air freight demand was down 18 percent in the first eight months of 2009 compared to the year-ago period, while passenger demand was down 6 percent.

IATA said Latin American and Middle Eastern carriers saw freight demand growing on the year in August and the Middle East was also the only region to record rising passenger demand.

In August, the passenger load factor improved by 1.2 percentage points on the year to 80.9 percent but average fares were 22 percent lower for premium seats and 18 percent down for economy seats.

IATA said earlier this month it expected a loss of USD$11 billion for the industry in 2009 and a USD$3.8 billion loss in 2010.

(Reuters)