WRAPUP 1-Analysts warn of Asia airline failure as tourism slows

* Leading airlines are posting losses or laying off staff * Future is uncertain, says Centre for Asia Pacific Aviation

By Kevin Lim and Lawrence Tan

SINGAPORE, Oct 30 (Reuters) - Aviation analysts warned on Thursday that Asian airlines will fail as tourism in the region slows and a worsening global economic outlook leads carriers such as Singapore Airlines to cut back flights.

The financial crisis is moving into the real economy as layoffs hurt consumer sentiment, leading airlines from China to India to post losses or layoff staff and hoteliers to focus on budget travellers as the luxury market takes a hit.

"There is not one airline in this region, and the rest of the world, that will be confident they will still be here this time next year," Peter Harbison, executive chairman at the Centre for Asia Pacific Aviation, told Reuters on the sidelines of an aviation conference in Singapore.

He said the bottom lines of carriers that rely heavily on business class travel such as Singapore Airlines (SIAL.SI) and Hong Kong's Cathay Pacific would be hurt by the financial crisis which is causing banks to cut staff.

Singapore Airlines, the world's second largest by market cap, said late on Wednesday it will cut flights to a number of Asian cities including Seoul, Osaka and Bangalore, with further capacity changes to be made quickly where demand falls.

Airlines may benefit from a recent slide in oil prices CLc1, but many have been burned this year by locking in fuel purchases as oil soared to record levels.

"From past lessons, the strong will get stronger and the weakest may not survive, and the not so strong ones may involve consolidation, merger, partnering," said Andrew Herdman, Director General for trade body the Association of Asia Pacific Airlines.

Indian airlines such as top private carrier Jet Airways (JET.BO) are resorting to job cuts and reducing capacity to cope with slow demand, high fuel prices and the credit crunch.

Jet Airways posted a loss for July-September, as did China's flag carrier Air China (0753.HK) and China Eastern Air (0670.HK) this week.

Harbison said: "China's airline industry is in financial trouble and restructure is inevitable, and hopefully in the process, they will see a recovery. The dark years in aviation will emerge very different with new models, and government involvement to grow."

China, Sri Lanka and Singapore have all reported receiving fewer tourists in September, worrying news for firms across the sector that had bold plans for expansion in a region that was seeing booming growth earlier this year.

French hotel group Accor (ACCP.PA) told Reuters on Thursday growth could come from domestic and intra-Asian travel even as international tourism dried up.

Asia Pacific chairman Michael Issenberg said Accor still plans to open 100 hotels in the Asia-Pacific region in the next 30 months as construction had begun, but projects slated to open from 2011 could see financing problems.

"Nobody builds hotels for next year," Issemberg said. "They build for the next 20, 30, 40 years. I don't see a lot of projects being cancelled although there will be delays." (Writing by Neil Chatterjee; Editing by Sharon Lindores)