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Last Updated: Wednesday, 15 December, 2004, 10:44 GMT
Asia to fuel air travel growth
Tailfins of planes at Heathrow
The airline industry could be in for a bumpy landing
Global air traffic is set to be boosted in the next three years by a rise in travel between Europe and Asia, thanks to growth in both China and India.

Cargo volumes will also enjoy growth but airlines' finances will take time to recover, a new report claims, as rising oil prices hit profits.

Global airline body IATA said international passenger numbers will rise 6% annually between 2005 and 2008.

IATA warned that carriers will struggle after making losses of $5bn this year.

Positive trends

General economic trends were positive for the airline industry, the organisation said in a report published on Wednesday.

This is the start of a good news story for the industry
Giovanni Bisignani

The booming economies of China and India are set to fuel growth in passenger numbers.

Traffic within the Asia-Pacific region is forecast to rise by 8.3% over the period while traffic between Europe and Asia could grow by 7.1%.

Cargo volumes, driven by the health of international trade, are forecast to rise 6%.

"If nothing changes in the operating environment, this is the start of a good news story for the industry," IATA's director general Giovanni Bisignani said.

Lost growth

IATA stressed that higher passenger numbers did not necessarily mean a return to profit for the many airlines which have fallen heavily into the red in recent years.

"Strong traffic growth is only half the story," Mr Bisignani added.

"Three years of lost growth will take more than a rebound in traffic to repair."

In a separate report published on Tuesday, IATA said that despite carrying a record 1.8 billion passengers in 2004, airlines' combined losses were likely to rise to $5bn by the end of the year.

If oil prices remain at about the $40-a-barrel level, IATA believes that losses will rise to $5.3bn in 2005.

While yields - the amount of money made per seat on flights flown - had declined, the IATA blamed the projected loss squarely on rising fuel costs, which have wiped out the effect of cost-cutting measures.

Airlines have weathered a turbulent few years with profits suffering from the Sars outbreak, Iraq war and terrorism fears in the wake of the 11 September 2001 attacks.

IATA members account for 95% of companies operating international flights, a total of 270 major airlines.

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