DEMAND for air freight is expected to slow in the remainder of 2010 and through 2011, according to the International Air Transport Association.

IATA said air freight markets were starting to cool off after a rapid post-recession rebound, with purchasing managers less optimistic and planning to ship fewer goods by air.

"All key indicators for air freight demand are now pointing to slower demand growth in the rest of this year and 2011," IATA was cited as saying. "The surge in air freight in Asia and South America is now slowing."

The need for fast deliveries when the global economy began to recover boosted air freight in 2009 and early 2010, according to IATA.

"That process appears to be coming to an end," it said of the surge in demand, and forecasting air freight growth would slow to six to seven per cent later this year and in 2011.

But India's Daily News & Analysis (DNA) noted that the profitability of cargo airlines has returned to their pre-recession halcyon days.

It cited IATA as saying in a report that profitability returned to pre-recession levels for US cargo airlines during the fourth quarter of 2009 and the first quarter of 2010. Asian carriers fared better as business confidence in the region improved, with volumes, load factors and yields peaking.

"Net profit margins of around four per cent and operating margins of six per cent are close to pre-recession levels in 2006 and 2007," IATA said.

IATA estimates airlines need to achieve an operating margin of at least eight per cent to generate the return on capital most investors expected. It said the last three months had seen a sharp rise in the number of airlines achieving this with the percentage of airlines generating eight per cent operating margin rising from nine per cent in the fourth quarter of 2009 to 15 per cent in the first quarter of 2010. "By the second quarter, one-third of reporting airlines were generating shareholder value," the report said.