ASIA'S budget airlines are likely to hold up because of their lower overheads should the global economy stall, industry players said on Tuesday.

A severe US housing slump and mortgage crisis sparked fears of a likely US recession spreading to the rest of the world, and on Monday led to a global stock market plunge which continued on Tuesday.

'What happened yesterday I think was a rush into fear territory,' said Peter Harbison, executive chairman of the Sydney-based Centre for Asia Pacific Aviation consultancy.

But Mr Harbison said he remains upbeat that Asia's budget carriers should be able to weather the conditions ahead.

'There is a lot of potential,' Mr Harbison said at the Asia Pacific Low Cost Airline Congress, a regional industry gathering.

'Those low-cost airlines should be more resilient to prosper even in difficult times like these,' he said.

South-east Asia's low-cost sector has boomed since the birth of Malaysia-based AirAsia, almost six years ago, spawned a host of imitators.

Tony Davis, chief executive of Singapore-based budget carrier Tiger Airways, was also confident the industry would ride out a widely-expected global slowdown.

'People are talking about a recession but I do honestly think low-cost airlines generally do better in those conditions particularly if a reduction in demand means that oil prices go down as well,' said Mr Davis, who spoke at the conference.

'People still want to travel. They still want their holidays. They are not willing to sacrifice lifestyle just because they are worried about expenditure, so they are more likely to go to our model,' he said. -- AFP