Although passenger demand is up significantly this year over last, the airline industry will remain in the red in 2010, predicts the International Air Transport Association (IATA), which this week released its January 2010 demand statistics for international scheduled air traffic.According to IATA, passenger demand for air travel was up 6.4 percent worldwide in January 2010, versus January 2009, and up 0.5 percent over December 2009. Passenger capacity, meanwhile, was up 1.2 percent year over year."Airlines have lost two to three years of growth. Demand is moving in the right direction," IATA Director General and CEO Giovanni Bisignani said in a statement. "We can start to see the future with some cautious optimism, but better volumes do not necessarily mean better profits. Passenger yields are still 15 percent below peak. And we expect 2010 losses to be $5.6 billion."The strongest air travel industry upturns have been in markets where recovery from the recession has been strongest, according to IATA, including Asia, Latin America and the Middle East. In North America and Europe, airlines saw January demand increase 2.1 percent and 3.1 percent, respectively. While both regions have experienced 6 percent growth over early 2009 lows, however, they remain 4 percent to 6 percent below early 2008 peaks—and will likely remain below peak until their governments allow for greater airline consolidation, Bisignani suggested."We are starting to see some encouraging signs in demand, albeit with large differences among the regions," he continued. "Unfortunately, the constraints of the archaic bilateral system limit airlines from being able to respond as normal businesses to market opportunities. We cannot behave like normal businesses. Political borders limit opportunities for consolidation. And we still require governments to negotiate open markets."