Global passenger demand grew by 3.7% in February, compared with the equivalent period last year, as business confidence improved, particularly in emerging regions, the International Air Transport Association’s (Iata’s) global passenger traffic results have shown.

The industry body stated that October 2012 appeared to have been a turning point for air travel markets, as passenger demand had been growing at a yearly rate of 9% since then, almost double the growth trend over the first nine months of 2012.

“Demand for air travel continues to rise on economic optimism and improved business confidence. But that comes with a few caveats; much of the growth is concentrated on emerging markets. Europe continues to be a laggard. And the handling of the banking crisis in Cyprus has reminded all of us that the deep problems in the Eurozone economies still remain,” Iata director-general and CEO Tony Tyler said.

He added that airlines were carefully managing capacity expansion, which was up by 1% in February, compared with the same month in 2012. This was keeping the industry load factor at a record high of 77.1%.

“This is helping the industry remain profitable despite persistently high oil prices,” Tyler noted.

In March, Iata raised its outlook for the industry’s earnings performance to a net profit margin of 1.6% from 1.3%.

“The industry’s fortunes appear to be moving in the right direction. But the margins are wafer thin. And any shock, the continuing Eurozone crisis or budget sequestration in the US, could negatively impact the outlook,” Tyler warned.

US budget sequestration measures took effect on April 1. Alongside the economic impact of uncertainty and reduced government spending, operational concerns were significant. Iata stated that passengers in the US could face flight delays and longer lines then usual at security and border control.

“It is unlikely that the savings that will be achieved from sequestration will offset the damage to the economy if air travel is discouraged by these cutbacks. Aviation is an important catalyst for economic growth and prosperity.

“The cost of the shocks, uncertainty and unpleasant surprises can only hamper efforts to revive the economy. The government’s priority should be on extracting the greatest economic benefit possible from aviation, not making it more difficult to do business,” Tyler urged.