Carriers have said they face daily issues like passengers watching pornography, throwing drinks at cabin crew or being verbally abusive.
But captains and crew are often worried they could be sued for assault if they take action in response.
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Airlines have reported over 15,000 incidents to IATA since it started collecting reports of bad passenger behavior in 2007.
A 22-year-old man from France that weighs more than 500 pounds is not being allowed to fly home because of his size.
"It's something we need to tackle as an industry and across the globe," said IATA spokesperson Chris Goater.
The association wants to address the issue at a diplomatic conference in Montreal in March, hoping for a global agreement on new guidelines.
Golden days of flying a thing of the past
The current legislation is based on the 1963 Tokyo Convention, which governs criminal offenses that pose as serious safety threats, but "the reality of today's industry is very different to that when the Tokyo Convention was developed," states IATA.
Psychologist Robert Bor, who has specialized in passenger behavior and fear of flying, agrees that much has changed since the 1960s.
"In those days flying was dreamlike -- people would dress up to go traveling and the airline adverts reflected the actual experience," he said.
Bor thinks the increase in air rage can be explained by more efficient reporting on one hand, but also by looking at society in general.
"It's evident that people are under a lot of pressure with their time and money," he said. He thinks the proposed revision of the Tokyo Convention is a step in the right direction.
"It is very important that we learn more about air range and that there is common policy between different countries about how to address it."
Stealing wine and threatening crew
But what really causes passengers to behave so badly on flights?
Bor says there are many different factors coming together.
"If you look at air rage cases it's often a fairly ordinary person, and a trigger can be another person who might put their seat back, added with a bit of alcohol consumption and a fear of flying."
Another factor could be the cabin layout and the environment in the aircraft.
"We know by research that lack of space can cause stress or even anger and people can become territorial," said Bor.
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"We might think of it as small trivial things, but actually we know that stress is cumulative."
What might be defined as rowdy passenger behavior can vary widely, and IATA has no grading system, says Goater.
Many cases involve alcohol consumption, like a man reportedly stealing wine from a trolley to lock himself in the toilet to drink it.
With a common policy Goater hopes passengers will then have a clear message of the consequences of acting up in the air.
"The small minority that commit unruly behavior and acts will begin to understand the serious consequences of their actions as police authorities and courts will have the necessary legal tools to deal with them in adequate manner," he said.