While international scheduled air traffic is “moving in the right direction” in the first month of 2010, with passenger demand up 6.4% versus 2009 and load factors up 75.9% from 72.2% in the comparative period, the airline industry will still remain in the red for this year, according to the International Air Transport Association (IATA).

"Airlines have lost 2-3 years of growth. The 3.0% increase in freight volumes from December to January is particularly encouraging. We can start to see the future with some cautious optimism, but better volumes do not necessarily mean better profits. Passenger yields are still 15% below peak. And we expect 2010 losses to be US$5.6 billion," explained Giovanni Bisignani, IATA's Director General and CEO.

This January, international cargo demand showed a 28.3% improvement with only a 3.7% increase in capacity. However, this pushed the cargo load factor to 49.6% which is a significant change from the 40.1% recorded in January 2009.

The large increases in year-on-year comparisons reflect a steady improvement from the fall in demand that characterized the early part of 2009 rather than a dramatic improvement in January, according to IATA. Compared to December 2009, and adjusting for seasonal variations, passenger demand grew by 0.5% while air freight volumes increased by 3.0%.

Furthermore, there are large geographical differences in the improvements. The strongest upturns have been seen in markets where economic recovery from the recession has been strongest-Asia, Latin America and the Middle East.

Compared to the low point in the cycle (February 2009) international passenger traffic is up 8.6%. The market has not yet recovered from the losses of 2008 and early 2009. Demand must improve by a further 2% to return to the peak levels of early 2008.

Asia-Pacific carriers experienced a 6.5% increase in demand compared to the previous year. Of the improvement in demand seen since the early 2009 low point, 31% has been realized by carriers in the region which is leading the global economic recovery.

Carriers in North America and Europe saw demand increase by 2.1% and 3.1%, respectively.

Although both regions have gained 6% from the early 2009 lows, they remain 4-6% below the early 2008 peak levels. This reflects the jobless recovery from the recession in which consumers are focused on paying down debt.

Middle Eastern carriers grew throughout the recession, with growth accelerated to 23.6% in January just as Latin American carriers saw demand increase by 11% in January on the back of a strong regional economy. African carriers also recorded a 6.3% improvement in January, assisted by robust regional economic activity.

With regards to international cargo demand, compared to the low point in the cycle (December 2008 - January 2009), international freight traffic has regained about 28%. This is still 3-4% below the early 2008 peak level.