David Schepp BBC News Online's North America business reporter

With each passing day, life becomes a little more normal in New York.

Security precautions taken in response to the 11 September terrorist attacks have been eased.

And the city that endured the crash of two massive airliners into the World Trade Center towers appears determined to return to its crusty old self.

So it is perhaps not so startling that financial analysts here are now talking about a mild recovery in the stricken airline industry whose business was pummelled by the attacks.

Lower air fares

The attacks of 11 September severely impacted US air travel

Yet despite some encouraging signs, including increases in passenger numbers and profits for many carriers, airlines still have a long way to go to match pre-11 September levels.

Following the attacks, the number of passengers fell by more than a third. Since then, analysts say the industry has made incremental increases month to month.

In order to woo passengers back, airlines have eased restrictions and dropped prices for leisure travellers.

"[Air fares] are about 20% to 25% down from this time last year," says Bill McGee, editor of Consumer Reports Travel Letter.

Despite the reduced number of travellers, however, leisure passengers are just as likely to encounter crowded conditions aboard jets.

"The bottom line is that the airline industry has really reduced the number of seats it had available at this time last year," Mr McGee told BBC News Online.

Charging high premiums

While holiday-seekers have seen prices drop, business travellers, who often travel at the last minute, have seen at best no increase in fares.

That leaves many believing the recently touted airline recovery could take longer than expected.

Analysts blame corporate cost cutting, implemented amid the US recession as a way to rein-in expenses for slack demand in business travel.

The airline industry is dependent on business travel for much of its profits, charging a high premium for last-minute travel.

The continuing weakness of the business travel market has caused the Federal Aviation Administration (FAA), the US government agency that monitors air travel, to say it does not expect air traffic to return to pre-11 September levels until 2003.

Boosting flights

Despite the overall slack demand for airline tickets among business travellers, United Airlines nevertheless plans to expand its number of flights over the upcoming summer months due to rumblings from business travellers.

They have complained of the lack of flight availability.

"The business flyer wants to go when they want to go," says Chris Bowers, who heads up marketing for United Airlines.

United Airline's decision will mean an increase of about 100 flights starting in June, a majority of them at its hub at Chicago's O'Hare airport, the nation's busiest, according to new FAA figures.

O'Hare Airport in Chicago is once again the nation's busiest

The increase in flights will result in the recall of laid off employees, including ground and service personnel, often viewed as the most vulnerable to industry slowdowns.

In February, United announced it was calling back 1,200 flight attendants, who were furloughed last autumn.

Cost cutting and consolidation

Other major US airlines, including Continental Airlines and American Airlines, the world's largest carrier, experienced increased demand in February.

Despite the improving numbers, analysts remained cautious as they awaited March figures, which will include the upcoming Easter holiday.

"The Easter holiday occurring in March versus April should help boost first-quarter results," Salomon Smith Barney airline analyst Brian Harris wrote in a recent research report.

Mr Harris views the March results as make or break for the airline industry.

Given the shaky nature of the recovery other analysts are keeping a keen eye on further cost-cutting and possible consolidation among airlines.

That may be bad news for consumers, however, as consolidation usually results in higher fares and fewer choices.