The global aviation industry will face losses of $5.6 billion in 2010, down from $11 billion in 2009, said Giovanni Bisignani, Director General & CEO of the International Air Transport Association (IATA).
"Our problem is the yields, and this year we have a lot of problems that capacity is going too fast," Bisignani told CNBC at the Singapore Airshow 2010.
"We have 1,400 new planes entering the fleet and this means that we are increasing capacity... The yields last year dropped $80 billion. We'll have a problem capping those kinds of losses," he said.
The expected reduction in losses this year is being led by Asia-Pacific's carriers who are set to see their losses shrink from US$3.4 billion in 2009 to US$700 million in 2010, according to a report on IATA's Web site.
"It has been quite amazing how Asia is picking up," Bisignani told CNBC's Asia Squawk Box at the Airshow.
"Asia is the biggest region in the world -- 25% of the total market, 647 million passengers."
Asia Travel Eclipses US
Bisignani said the financial crisis in the United States saw the number of travelers in Asia Pacific eclipse that in North America to become the world's largest aviation market.
"It's up to Asia to take leadership and try to set a new set of rules because that is what we need in order to improve our profitability and become a normal business," he added.
Asia Pacific's travelers numbered 647 million compared the 638 million who traveled within North America (including domestic markets), the IATA report stated, adding that by 2013 an additional 217 million travelers are expected to take to the skies within the region.
Bisignani expects the global air transport industry to triple in size when Asians travel as much as those in the U.S.