Executives at two key regional budget carriers told an aviation conference that compared with premium airlines, which have been battered by waning travel appetite, business has been good for the low-cost industry.

Sharply lower fuel prices had enabled budget carriers to keep tickets cheap while efforts by governments to open up the aviation sector should allow them to fly to more destinations, the executives said.

But Peter Harbison, executive director of Sydney-based consultancy the Centre for Asia Pacific Aviation, said route expansion depends on 'governments not bringing down protectionist shadows' to support premium carriers. This, he said, could have a devastating effect on the industry.

Tony Davis, chief executive of Singapore-based Tiger Airways, told the conference that a slump in fuel prices has allowed the company to continue to offer cheap flights.

Crude costs have fallen by about 75 per cent since hitting a record high above US$147 (S$221) last July.

'We're bucking the trend,' Mr Davis said, referring to the falling passenger numbers reported by full service airlines.

Tiger Airways spokesman Matt Hobbs told AFP the airline saw passenger volumes rise 50.4 per cent in the quarter ended December over the previous year, with load factors above 80 per cent.

The airline in December scrapped plans to establish a budget carrier with South Korea's Incheon city due to the worsening global economic situation, but is expanding in other areas.

It currently flies from Singapore to Melbourne and has plans to open other routes to Adelaide and possibly Darwin, Mr Davis said.

However, the biggest risk now is governments imposing barriers to protect full-service airlines, many of which are state-owned, he added.

Tiger Airways is 49 per cent owned by Singapore Airlines.

Bruce Buchanan, chief executive of Australian budget airline Jetstar - the low-cost offshoot of Qantas - said lower interest rates have given families room to spend on travel, despite the economic downturn. He cited overcapacity as the main risk for the industry.

Full-service airlines have reported severe declines in passenger traffic over the past several months, Mr Harbison said, warning that if the trend continues some could collapse.

'This is not just a temporary phase. This is a whole redirection of the industry for at least a year,' he told the annual conference on low-cost airlines. 'If the trend among the full-service carriers continues, 'we will start to see airlines being grounded this year,' he noted.

But the current crisis is providing opportunities for budget airlines, including attracting more business people, the companies said.

'All airlines are not created equal. I think low cost airlines this year are going to do significantly better than their full-service colleagues,' Mr Davis said. 'It's easy to believe that the whole world is in recession, it is not. Growth rates in Asia are coming down but they are still positive.' -- AFP