The global economy is falling "perilously close" to growth levels at which, in the past, airline industry profits have turned to loss, according to the International Airline Transport Association (Iata).
In addition, air freight is suffering from the twin blows of sluggish growth and changing patterns in global business and has shrunk after a brief recovery in 2010 following the global financial crisis.
Passenger volume is on the rise, though.
"Historically, when GDP growth has fallen below 2 per cent the airline industry has returned a collective loss," said Tony Tyler, Iata's director general and chief executive.
"Now, with GDP growth close to that 'stall speed' and oil at US$109.50 a barrel, we expected much weaker performance. But airlines have adjusted to this difficult environment through improving efficiency and restructuring.
"That is protecting cash flows against weak economic growth and high fuel prices," he said. "Overall performance has been positively impacted by strong passenger traffic growth, at 5.3 per cent, and a 3 per cent improvement in yields."
Air freight volume has fallen from more than 16 billion tonnes per kilometre a month in 2010, to about 14.4 billion now, while passenger kilometres travelled has climbed steadily over the same period from just more than 350 billion per month to more than 440 billion, according to Iata figures.
Business travel was contributing to the improved passenger numbers, despite the slowing world economy, said Brian Pearce, Iata's chief economist. But in sharp contrast, cargo markets had contracted by 2 per cent from last year.
"One unusual feature of the aviation markets is the strong divergence between a robust expansion in air travel and the shrinkage of air freight since peaking in early 2010 after rebounding sharply from the recession," Mr Pearce said.
"In past cycles, weakness in air freight has been a leading indicator of weakness in air travel. That has not been the case this time.
"The reason is, in large part, due to the pattern of recent economic growth. The bulk of economic growth has come from emerging markets, rather than the US or Europe. This has meant more demand for bulk commodities rather than the high-value, low volume consumer goods that usually travel by air. This has favoured sea over air transport for freight, but air travel continued to be supported by continued economic growth," Mr Pearce said.
He added that fuel costs were another problem facing the industry. Slight relief in oil prices had not translated into relief on the fuel price, which was increasing because of a widening of refinery margins.
Jet-fuel costs were now expected to average $129.50 a barrel, up $1.80 on the previous forecast. This highlighted that despite the improved prospects, the industry remained weak overall, Mr Pearce said.
"The $6.7 billion [Dh24.61bn] expected net profit is a fall from the $8.8bn that the industry made in 2011, and the 1 per cent net profit margin is well below the 7 to 8 per cent needed to recover the industry's cost of capital," said Mr Pearce.
But changes to the industry's structure had contributed to improved financial performances since the second quarter, Mr Tyler added.
"In the difficult business environment of the past year, airlines have been seeking to lower costs and improve yields through restructuring," he said. "Recent alliances and joint ventures have enabled economies of scale as well as offering more choice for passengers.
"A sharp fall in the number of new entrants, due to the lack of funding for start-ups, and a number of airline bankruptcies have also contributed to an improved industry structure which has allowed airlines to share efficiency gains between improved service for passengers and better returns for investors."
"On international markets, only Middle East airlines continue to expand at a rapid pace, taking share of long-haul markets and developing new east-west markets between Africa and Asia," Mr Pearce said.
