The International Air Transport Association (Iata), umbrella organisation for 280 of the world's largest airlines, says passenger and cargo traffic growth should recover to pre-September 11 levels by the end of next year, but financial prospects are far less certain. In its latest publication, A Review of Air Transport Following September 11, the Geneva-based organisation said the effects of significantly reduced yield, particularly from premium traffic, was likely to delay financial recovery of the industry until 2004. 'By the end of 2003, we expect to recover most of our lost ground and to be back at pre-September 11 volumes,' Iata's director-general Giovanni Bisignani said. However, the organisation admitted 'recovery does not mean a return to the way things were before September 11'. He warned that 'at this critical point in the industry's recovery, the challenge for the full-service carriers is to return to capacity to the market at appropriate levels. 'We cannot afford to repeat the mistakes of the past when airlines expanded capacity at the expense of profitability.' In April, Iata forecast the industry would make a global loss of between US$4 billion and US$8 billion on international scheduled operations this year, extending last year's US$12 billion loss. However, it now believes that given the industry recovery that has taken place outside of the United States, particularly the encouraging first-half reporting from Asia, losses would be in a lower range, of between US$4 billion and US$6 billion. Iata said recovery in traffic and scaling of capacity to meet that demand were challenges the industry had to address in the past year. Passenger traffic for the full year would likely decline 3 per cent from last year, Iata said, adding that most of this decline would come from the still-struggling US market. 'Delta Airlines estimates that loss of business resulting from the 'hassle' factor' will amount to over US$600 million in 2002. 'The day trip has basically disappeared from many business agendas and the costs of spending a night away amid an economic slump has meant that business people are finding alternatives to travel,' Mr Bisignani said. Traffic among Iata members next year was expected to recover to 6 per cent growth, with average growth for each year until 2006 expected to reach 4 per cent. Recovery has been strongest in the Asia-Pacific market, while in Europe, carriers with the largest exposure to the US continued to feel the greatest negative impact. Iata said China continued to show strong growth and some Asian markets have benefited from increased tourist traffic as a result of perceptions of security. Globally, on all international operations outside of the US, passenger traffic was likely to increase 1 per cent this year, followed by growth of 5 per cent next year and 2004, and 4 per cent in the following two years. Iata also spoke out strongly against airport and air traffic control (ATC) companies that have been viewed as not shouldering enough of the financial burden since September 11. 'It is unacceptable that in a year in which airlines without exception have suffered losses amounting to billions of dollars, some industry partners including airports and ATC providers have posted strong profits,' Mr Bisignani said. Governments were also criticised for not offering the industry more support since the attacks, which have caused security and insurance costs to skyrocket. Mr Bisginani said: 'Airlines cannot replace governments in protecting people and property from the costs of a terror attack. 'Despite a 400 per cent increase in premiums, commercial insurers clearly have no taste for third-party war risk insurance and have effectively abandoned the market.'