CAPE TOWN (AFP) - Global airlines are set to post profits of US$12.7 billion (S$16 billion) this year, the International Air Transport Association (IATA) forecast on Monday, revising higher a previous estimate.

This compared to US$7.6 billion in profits made last year and was an improvement on a March forecast of US$10.6 billion.

If confirmed, it would make 2013 the industry's third-best year since 2001.

But IATA head Tony Tyler said business was "still tough" and noted that airlines were operating with a 1.8-per cent profit margin.

This was a "four dollar profit per passenger, less than the price of a sandwich in most parts of the world," he told the global airline body's annual general meeting.

Fuel costs had increased by 55 per cent since 2006 and airlines were flying against considerable economic headwinds, he complained.

"Generating even these small profits under current conditions is a major achievement," said Tyler.

IATA estimated airlines would carry some 3.1 billion people this year - rising above the three billion mark for the first time - and transport more than 52 million tonnes of cargo.