Recovery hopes for battered airline industry

HOPES for the battered airline industry were raised yesterday after the global aviation body predicted a strong recovery this year as passengers take to the skies again.

The International Air Transport Association (IATA), which represents some 230 airlines worldwide, slashed its forecast for losses across the industry this year by half to $2.8 billion (1.9bn).

It said passenger demand had surged at the end of the year – a trend that has continued into 2010 thanks to growth areas such as Latin America and Asia.

But IATA warned of a "two-speed industry", with the revival predicted to be far slower in the hard-hit European and North American markets.

While passenger demand is expected to rise by 12 per cent across Asia and Latin America in 2010, growth will be far more muted across Europe and North America, at 4.2 per cent and 6.2 per cent respectively.

Any growth will come as a relief to embattled carriers in the UK, such as British Airways, which has suffered plunging passenger numbers.

However, signs of a turnaround are beginning to emerge even at premium carriers like BA, which reported its first quarterly operating profit in more than a year for the three months to 31 December.

IATA director-general Giovanni Bisignani said: "Important fundamentals are moving in the right direction.

"Demand is improving. The industry has been wise in managing capacity. Prices are beginning to align with costs – premium travel aside.

"We can be optimistic, but with due caution."

The group said revenues across the global industry were halfway to recovery – $42bn below the peak seen in 2008 and $43bn above the low-point last year.