U.S. airlines are on pace to set an annual record for lateness, with travel rebound in the first half of 2004 and a sharp increase in flight delays, according to government data Thursday.

Big U.S. airports were busier than ever with 3.5 million arrivals and departures for the first six months of the year. But late arrivals nationally, at 710,000, and late departures, at 574,000, were both up about a third over the same period last year.

Delayed flights also were noticeably higher for the first six months of the year than the same period in 1999 and 2000 when air traffic congestion set annual records, Transportation Department (search) figures showed.

This spring and summer, airlines have experienced their strongest surge in traffic since the Sept. 11, 2001, hijack attacks.

The attacks triggered a steep decline in traffic and accelerated an industry financial slide that led to record losses and bankruptcies at US Airways and No. 2 United Airlines .

Fueling air travel growth and congestion this year has been the expanding operations at low-cost airlines to bigger cities and aggressive efforts by traditional network carriers to protect their turf.

Big airlines are also relying more on 50- and 70-seat regional jets that have flooded some markets, like O'Hare Airport (search) in Chicago.

O'Hare is the world's busiest for arrivals and departures, but is also the worst for delays among 31 big U.S. airports. Dominated by United and No. 1 American Airlines, O'Hare had an on-time arrival rate of 63.8 percent in the first six months of 2004.

Philadelphia, New York LaGuardia, Atlanta and Newark, all big congested airports with a mix of airline service, round out the bottom five.

Federal regulators and more than a dozen airlines that use O'Hare met for a second day on Thursday to try and work out a voluntary agreement for reducing flight schedules at peak hours to ease congestion.

Transportation Secretary Norman Mineta on Wednesday threatened to take the unusual step of capping flights at O'Hare if more the passenger and cargo airlines failed to agree on schedule cuts.

Because O'Hare is the nation's prime connecting point and a major center for international air travel, delays there can ripple through the nation's aviation system.

Government restrictions on commercial flight operations at O'Hare were lifted in 2002, but air traffic has only recovered enough this year for delays to become a problem.

While bad weather is blamed for most delays, airlines reported to the government that their flights were also held up by congestion, air traffic control procedures or problems on the ground at airports.