SINGAPORE Airlines' regional unit SilkAir said on Tuesday it expected continued strong passenger demand for its Asian destinations despite high fuel prices and other challenges.

Chief executive Chin Yau Seng told reporters that SilkAir had slightly lowered its passenger capacity growth forecast for the year because of 'a few blips' in demand despite the strong overall sentiment.

'So far we have seen continued strong support to a lot of our regional points,' Mr Chin said, adding the support came from holidaymakers and business travellers.

SilkAir, whose fiscal year ended in March, reported a 12.3 per cent increase in passengers, to 1.82 million.

It said operating profit was $40 million, up 100.5 per cent, on revenue of S$506 million.

Mr Chin said SilkAir had planned for capacity growth of about eight to 10 per cent this financial year but now foresees five to seven per cent, partly because of the impact of natural disasters in China and Myanmar.

SilkAir flies to Chengdu, the main city in China's Sichuan province, a tourist destination struck by a massive earthquake in May.

A cyclone devastated Myanmar the same month. That country's main city, Yangon, is also served by the airline.

The carrier also flies to South Asia, other Chinese cities and secondary destinations in Southeast Asia.

Mr Chin said there had been 'some softening of demand to China for various reasons' over the Olympic period but did not elaborate. The Beijing Games opened on August 8 and end on Sunday.

'I think this year there are some challenges, fuel being one of them, but that is part and parcel of the business,' Mr Chin said.

High oil prices have sparked the biggest crisis in Asia's airline industry in several years, and analysts have said some carriers were likely to go under unless jet fuel costs eased.

Singapore Airlines said last month its net profit in the first quarter fell 15.4 per cent compared with the same period last year as higher fuel costs cut into rising revenues.