Further mergers among airlines are essential in order to cut costs and improve competitiveness in an industry seen sustaining combined losses of $2.8 billion this year, the head of airline industry body IATA said on Monday.

Mergers and consolidation is a must ... No other industry is so fragmented, so we have to consolidate in order to build more efficiency, Giovanni Bisignani, director-general of the International Air Transport Association, told a few reporters.

He called for regulatory support for barrier-free mergers across borders, explaining that different legal frameworks have hindered extensive global industry consolidation, involving, for example, U.S. and European airlines.

I'm raising the agenda of freedom on consolidation because we cannot do the same thing (as in Europe, where some cross-border mergers have been helped by unified legal frameworks) between an American and a European carrier.

Asked about a possible merger between United Airlines and US Airways , he said he would not comment on individual deals.

There are many many conversations going on. Everyone is dating, but I make no comments on dating, Bisignani said.

He is visiting Japan to meet transport minister Seiji Maehara later on Monday. The industry body chief said he will ask the minister to improve the cost competitiveness and infrastructure of Japan's Narita and Haneda international airports.

You are located in a wonderful part of the world, with China in front of you, Bisignani continued.

That is the only opportunity that you have. Take advantage of this area of the world where traffic is still growing.

IATA said on March 30 that airlines were climbing out of recession with strong rises in passenger travel and cargo in February. Passenger demand that month was up 9.5 percent from a year earlier, while supply increased by only 1.9 percent.

IATA, which comprises about 230 airlines, including United Airlines and US Airways, forecast last month that carriers would lose a combined $2.8 billion this year after a $9.4 billion loss last year, but should post a combined profit in 2011.

(Reporting by Yumiko Nishitani; Editing by Joseph Radford)

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