JERUSALEM — A Palestinian airline could be flying by this summer, says the director general of the International Air Transport Association (IATA).

Pierre Jeanniot, who heads the organization of airlines from around the world, met on Wednesday of last week with Palestinian Council President Yasser Arafat and with Fayeez Zeidan, who is in charge of civil aviation development for the Palestinian Authority.

Jeanniot said the Palestinian airline would begin on a limited scale, with shuttle flights between Gaza and the West Bank. Flights further afield will come later.

Initially, Jeanniot said, the airline would operate under the umbrella of an Israeli permit, since all airlines must have a permit from a recognized authority. Any further development, he said, would have to be a result of negotiations between Israel and the Palestinians.

The Palestinians would have no problem with personnel, he said, since they have trained people who have been employed in other countries. At present, the P.A. has two planes, each capable of carrying up to 50 passengers, donated by the Dutch government. Apparently, other states will also contribute aircraft, he added.

Jeanniot, who said that one of the problems of air transport in the Middle East is that air space is fragmented between the states of the region, added that he would like to see a more rational use, similar to that in Europe.

He said he is aware of the problem facing Israel as a result of the refusal of Saudi Arabia to allow overflights, and he would "remind" the Saudis of this when he meets with them.

He also noted the severe congestion at Ben-Gurion Airport northeast of Tel Aviv, and urged the government to deal with the situation quickly if it wants to reap the benefits of increased interest in Israel as a tourist destination as a result of the peace process.