The global air freight industry could be looking forward to a rosier future after IATA's latest report pointed to a higher than expected pace of growth in both volumes and yields. IATA revised its 2010 overall air transport outlook, projecting a profit of US$8.9 billion - up from the $2.5 billion forecast in June - although it believes profitability will drop to $5.3 billion in 2011. "The industry recovery has been stronger and faster than anyone predicted," said Giovanni Bisignani, IATA's Director General and CEO. "The $8.9 billion profit we are projecting will start to recoup the nearly $50 billion lost over the previous decade. "But a reality check is in order. There are lingering doubts about how long this cyclical upturn will last. Even if it is sustainable, the profit margins that we operate on are so razor-thin that even increasing profits 3.5 times only generates a 1.6% margin." Uncertainties about the economic outlook are rising, with talk of a "double-dip" recession, but, says IATA's report, current conditions in freight markets remain positive. Revenues have been growing strongly and, in many regions, cargo profitability is back to pre-recession levels. Although growth in international freight markets has slowed from the annual rate of over 20% seen at the end of 2009 and first quarter of 2010 to just 11%, this is still well above the previous 6% growth trend. Cargo yields are recovering faster than passenger yields due to tighter supply anddemand conditions - but only on some trade lanes. While yields have not recovered to pre-recession peaks, load factors are at historically high levels and freighter utilisation is back to what they were before the recession. However, even without a double dip, demand will slow and new capacity will put pressure on load factors and yields. "All the key indicators for air freight demand are now pointing to slower growth in the rest of this year and 2011," said a spokesman. "Purchasing managers are less optimistic, the inventory cycle is over. Final sales become key now." The business inventory cycle and the need for speedy shipment at the start of the economic recovery meant air freight took a much larger share of the rise in world trade during 2009 and early 2010 than other modes. That process appears to be coming to an end and there are also signs that overall world trade is slowing.(ifw)