HANOI (AFP)--State-owned Lao Airlines has reduced its international service as the global economic downturn hits passenger demand, a company executive said Tuesday.

"We reduced some flights because of the world economic situation, and now it's low season," Rada Sunthorn, the airline's commercial director, said.

The airline has since the end of April cut to five times a week its daily services from the capital Vientiane to Hanoi and Kunming in China, Rada said.

Daily flights from the tourist destination of Luang Prabang to Bangkok and to Chiang Mai in northern Thailand have also been cut to five times a week, while the Luang Prabang-Siem Reep service now operates twice a week from thrice, he said.

A drop in tourist arrivals was evident in mid-April during the Buddhist New Year holiday period when there were only four flights a day between Vientiane and Luang Prabang, Rada said.

There are normally 10 flights a day on that route during the new year.

The airline carried 361,000 people in 2008, an increase of 7% year-on-year.

Rada didn't have figures for passenger volume this year, but he said the number was down.

He expressed hope that passenger volume would recover late this year during the high season and when Laos hosts the South East Asia Games.

Falling passenger numbers have led to losses on the balance sheets of the world's major airlines, which have cut back staff and services to confront what the industry association IATA says is one of the toughest years for the sector.