Airlines' load factors are still at record or near-record highs due to slower rise in capacity, according a report by the Shipping Gazette.
The report cited the March/April edition of the International Air Transport Association's "Financial Monitor."
It said demand rose "strongly" in the first quarter on 2010, with air freight up by 26% and air travel up 9% year on year, according to the report, which cited a British International Freight Association (BIFA) newsletter.
Rising fuel prices are however adding pressure to cost costs, the report added.
"Average fares are also rising, providing some offset, as supply-demand conditions tighten further," it said.
It added that deliveries of new aircraft were up to 116 in March with eight taken out of storage and 12 aircraft retired.