2012 is turning out to be a better year than expected for the global airline industry.

Company mergers and higher air fares have helped offset rising costs.

The airline industry is forecast to earn $4.1-billion this year, a billion more than forecast in June but it’s still less than half what was achieved in 2011.

Carriers in Asia and the U.S. have posted improved results over the summer, according to the International Air Transport Association.

The industry has been reshaping itself this year, with more amalgamations and lower capacity, keeping ticket prices higher offsetting higher fuel prices and lower demand.    

Carriers have been cautious with the number of seats available with passenger traffic increasing 1.5 per cent ahead of capacity for the first eight months of the year.  

European airlines are expected to lose money this year due to the debt crisis with more red ink forecast for 2013.