AIRSHOW-Asia air travel to moderate as world economy cools

By Melanie Lee

SINGAPORE, Feb 22 (Reuters) - Asia's boom in air travel will moderate this year on a possible recession in the United States, but the region's growing wealth and business opportunities may help it weather the storm.

The rapid growth of air travel in Asia over the last few years was fuelled by emerging wealth in the region and the entry of low-cost carriers such as Malaysia's AirAsia (AIRA.KL: Quote, Profile, Research), Tiger Airways and Jetstar, but regional economies are now faced with the threat of slowing Western demand for Asian exports.

"I think the aviation industry tends to reflect the state of the economies the world, so there will be some effect on demand for air travel," said Chew Choon Seng, chief executive of Singapore Airlines (SIAL.SI: Quote, Profile, Research).

Asia is forecast to be the largest single aviation market, accounting for 27 percent of all air travel and nearly 300 million more travellers than today, said Giovanni Bisignani, chief executive of International Air Transport Association (IATA) at the Singapore Airshow.

However, with airlines looking to pass on high fuel costs by raising surcharges, and the possibility of a global economic slowdown, consumers may not think about taking hops around the region.

"If you are looking at a slowdown, some consumer spending will be curtailed...taking a holiday will be the last thing on some people's minds," said Alvin Liew, economist at Standard Chartered Bank.

IATA expects growth in international air traffic to slow in 2008 and projects passenger traffic demand to fall to 5 percent from 7.4 percent in 2007.