KUALA LUMPUR: Airline industry association IATA said Thursday the outlook for the ailing aviation industry remains bleak and warned airlines that a recovery will take more than three years.

Giovanni Bisignani, the International Air Transport Association's (IATA) director general, also urged governments to adopt open skies policies and further deregulate trans-Atlantic air travel to escape the crisis.

"The situation is really difficult, caused by this worldwide recession. We face a demand shock. Traffic is disappearing. Cargo has never been so down," he told reporters.

"It will take more than three years (for revenue) to recover. The (world) economy is not moving forward. We have piles of inventory -- chips and cars -- not moving," Bisignani added.

The IATA boss is in Malaysia ahead of the association's annual general meeting, which will be held here June 7-9. He said the meeting will focus on safety, environmental issues and industry liberalisation.

Bisignani said Asia had emerged as the centre of the problem -- between January and April global passenger demand fell 7.5 percent, but Asian carriers led the plunge with 11 percent.

Bisignani said amid the swine flu outbreak and with no signs of global recovery, IATA would further downgrade its airlines losses for 2009, adding that the new, "more pessimistic" data would be revealed Monday.

"We are in intensive care. It will be substantially worse than March forecast. Now fuel price is going up. That is bad news," he said.

IATA in March said losses during 2009 could hit 4.7 billion dollars after forecasting in December that airlines could lose 2.5 billion dollars. The airline industry posted a revenue of 530 billion dollars in 2008.

Bisignani pressed for full liberalisation between the European Union and US, and mergers between airlines, among measures he said would boost the industry.

"We are not asking for support from governments. It is time for governments to wake up," he said.

"Defending the flag on the tail of the plane does not defend the jobs. The only thing that defends the jobs is having a healthier industry that makes profit and can support the challenges of the economy today," he added.

Bisignani also gave his backing to the American Airlines-British Airways request for antitrust immunity, which had attracted opposition from Virgin Atlantic head Sir Richard Branson.

"Absolutely. We should be given freedom to run our business," he said.

Branson had said immunity for the two airlines would create a "monster monopoly" between the United States and London's Heathrow Airport.