The International Air Transport Association (Iata) has lowered its forecast for the global industry's profitability in 2014 by $US1 billion because of higher oil prices.
It now expects just under $US19 billion in profits from the industry this year.
It expects Brent crude oil to average $US108 a barrel, $3.50 a barrel higher than its previous projection, which will add $3 billion to airlines' annual fuel bill.
But Iata says that will be offset by stronger demand, especially for cargo, as the global economy strengthens.
Chief executive Tony Tyler says the industry will still have to graple with higher fuel costs but the outlook is still positive.
Iata says that, overall, industry profitability is still unsatisfactory. On average, it's expected to retain $5.65 per passenger in net profit this year. While that's up from $4.13 in 2013, it's below the $6.45 achieved in 2010.
