Civil aviation has an impact on the world economy of close to one thousand billion dollars each year. Although the airline business continues to grow rapidly, it does so in cyclical spasms. In recent years it has been on the brink of collapse, with losses world-wide totalling 15.6 billion dollars. STATE OF THE AIR examines how the airlines are fighting back and forging a new future for passenger aviation.

The airline industry was born 75 years ago, in the trailblazing days when flying was considered the ultimate adventure. Airlines then grew rapidly into objects of national prestige, and governments enveloped their flag carriers in protection and regulation. This year more than 1.2 billion people will take to the air. In the next 25 years that number is expected to treble.

The Gulf War took the airline industry to the brink of collapse.

Oil prices rocketed and travellers avoided air travel in fear of terrorist attack. In just four years, the airlines lost over 15 billion dollars - equivalent to all the gains made in 75 years. But today, a new era in passenger aviation is dawning. As governments are forced to remove their regulations and subsidies, airlines are rising to the challenge - shedding their last romantic pretences and tooling up to fight in the cut throat world of mass transportation.

Top airline executives analyse the current state of the airline industry and its future challenges - coping with the massive growth in air traffic, the necessary investments in infrastructure, the growing environmental problems, the replacement of ageing aircraft, and an ever more demanding customer. Today in the new era of no-frills service and global alliances, airlines are fighting back and forging a new future for passenger aviation.