GENEVA (REUTERS) - Global air travel demand rose 3.7 per cent in January from a year earlier and may pick up pace in 2013, the International Air Transport Association (IATA) said on Tuesday.

"Passenger travel is growing in line with business confidence levels. Recent months have seen some positive economic signs emerge in both the US and China, and the euro zone crisis seems to have stabilised," said IATA Chief Executive Tony Tyler.

Challenges for the sector include high fuel costs and uncertain demand as the world's top economy, the US, prepares to make across-the-board government budget cuts, he added.

"But even with those headwinds - real and potential - we still see underlying support for continued and potentially even strengthened growth," Tyler said.

Passenger traffic grew more rapidly than available capacity, which rose by 2.7 per cent in January on international routes, meaning planes flew with fewer empty seats.

Air freight demand, seen as a short-term leading indicator of economic growth, also grew strongly in the same month, driven by growth in Asia and the Middle East, IATA said on Monday.

IATA's members include major airlines such as British Airways, Delta and Air China.