Iata is urging European governments to develop more efficient methods to identify air space contaminated by volcanic ash.
The organisation's director general, Giovanni Bisignani, said European politicians had to act quickly because the problem was "not going to go away anytime soon".
Yesterday more than 1,00 flights were cancelled in the UK and Europe because of continuing eruptions in Iceland.
Bisignani said many services were grounded unnecessarily.
"The current European-wide system to decide on airspace closures is not working," he said.
"We welcome the operational refinements made by the Volcanic Ash Advisory Centre (VAAC) in their theoretical model but we are still basically relying on one-dimensional information to make decisions on a four-dimensional problem.
"The result is the unnecessary closure of airspace. Safety is always our number one priority.
"But we must make decisions based on facts, not on uncorroborated theoretical models."
Bisignani praised both the British and French authorities for taking steps to mitigate the number of aircraft grounded.
"France has been able to safely keep its airspace open by enhancing the VAAC data with operational expertise to more precisely determine safe fly zones.
"The UK Civil Aviation Authority (CAA), working with the UK NATS (the air navigation service provider), have announced another step forward by working with airlines and manufacturers to more accurately define tolerance levels while taking into account special operational procedures. Both are examples for other European governments to follow," said Bisignani.
Airlines across Europe have already lost tens of millions of Euros because of the disruption caused by the volcanic ash.
Calls for a single European sky have been made for many years, but airline chief executives have unanimously called for the situation to be addressed as a matter of urgency.
Thomas Winkleman, chief executive of low cost airline Germanwings, said: "The need for a single European sky has never been more urgent. They do not have these problems in the United States. One sky would mean one set of rules, one set of procedures, one IT system, and would save money and the environment."