The region's carriers moved 11% more travellers in November than they did at the pre-recession peak in early 2008.
However, international air traffic slowed in a sign that the global economic recovery is losing speed.
Iata said harsh weather conditions in many countries in December were weighing on business.
"The year-end holiday season has been tough for travellers and for airlines," Iata director-general, Giovanni Bisignani said. "Airlines saw lost revenues and saw costs rise."
Bisignani repeated Iata's recent profit forecast for the industry, saying a strong end to 2010 overall should lift profits to $15.1bn. Slowing traffic growth was in line with projections for a reduced profit of $9.1bn in 2011.
"The industry is shifting gears in the recovery cycle," Bisignani said.
"Growth is slowing towards normal historical levels in the 5% to 6% range. Relative weakness in developed markets is being offset by the momentum of economic expansion in developing markets," he added.
The air traffic numbers are in line with other signs that the global recovery from economic crisis is losing speed. The International Monetary Fund expects 4.2% global growth next year, which would be a step down from 2010 but well above the recession-hit rates of the previous two years.
Air freight - an important indicator of trade and economic recovery - grew by 5.4% in November from a year ago, well below the 14.5% rise recorded in October.
Freight traffic, which accounts for 35% of the value of goods traded internationally, is now at the pre-crisis levels of early 2008, said Iata, which represents 230 airlines including Aeroflot, Air China, Lan Airlines and Lufthansa.
Passenger demand - a reflection of business and consumer confidence - was 8.2% higher in November than a year earlier, below October's 10% rise, and is now 4% above pre-crisis levels.
Air traffic growth slowed significantly in all regions with the exception of Africa, Iata said. Freight levels remained well below their pre-crisis levels in North America and Europe.
