Airlines are entering 2013 with "guarded optimism" after a 5.3% rise in passenger demand was recorded for last year, according to Iata.
The increase in 2012 was slightly down on the 2011 growth of 5.9% but above the 25 year average of 5%, new figures show.
International demand for flights was up by 6% with the strongest growth coming from the Middle East, Latin America and Africa.
Domestic air travel grew by 4% with China and Brazil ranked as the strongest performers. India was the weakest with a 2.1% reduction on 2011 levels.
European airlines’ passenger traffic expanded by 5.3%, sharply down on the 9.5% growth recorded in 2011.
Iata director general and chief executive Tony Tyler (pictured) said: "We are entering 2013 with some guarded optimism. Business confidence is up. The eurozone situation is more stable than it was a year ago and the US avoided the fiscal cliff."
But he added: "Significant headwinds remain. There is no end in sight for high fuel prices and GDP growth is projected at just 2.3%."
The momentum built-up at the end of last year should see the passenger business expand close to the 5% historical growth trend.
Tyler said: "2013 will not be a banner year for profitability, but we should see some improvement on 2012."
He described passenger demand as growing strongly despite the economic bad news that dominated much of the last 12 months.
"This demonstrates just how integral global air travel is for today’s connected world. At the same time, near-record load factors illustrate the extreme care with which airlines manage capacity," said Tyler.
"Growth and high aircraft utilisation combined to help airlines deliver an estimated $6.7 billion profit in 2012 despite high fuel prices.
"But with a net profit margin of just 1% the industry is only just keeping its head above water."
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