Singapore - Asia's airlines saw some signs of recovery after passenger demand slumped during the global recession, the head of a regional industry body said Friday, but the business environment continued to be challenging.

"Hopefully, we are at least through the worst of the downturn," Andrew Herdman, director general of the Association of Asia Pacific Airlines (AAPA) told an industry forum in Singapore.

"There are some encouraging signs that air traffic is starting to recover," he said.

However, airlines continued to face an "extremely challenging operating environment," Herdman said, adding that "it will take time to nurse battered balance sheets back to full health."

Airlines in Asia-Pacific were expected to report "further heavy losses this year," the head of AAPA said, but he did not give any figures.

Last year, the 17 regional airlines represented by the Kuala-Lumpur-based association - including Singapore Airlines, Thai Airways and Qantas - reported an aggregate loss of 4.8 billion US dollars, Herdman said.

"Passenger traffic continued to deteriorate throughout the first half of 2009," he said, "it has only recently begun to show some signs of stabilization."

According to AAPA, its airlines carried 11.1 million passengers in October, slightly more than in the previous month, but still 3 per cent below the level of October 2008.

Following a reduction in capacity, airlines had seen passenger load factors recover, Herdman said.

"But low yields mean continuing losses for the industry," he added, "and rising oil prices are certainly not helping." (dpa)