Business travel demand is holding up better than price-sensitive leisure travel in a sign of business confidence and a recovery in world trade, the chief economist of global airlines body IATA said on Tuesday.

Pearce said Chinese domestic traffic, which is often regarded as a barometer of the domestic stimulus in the world's second largest economy, had dipped temporarily as authorities moved to head off inflation but should return to a path of structural growth.

He warned that record deliveries of some 1,300 to 1,400 jet and turboprop aircraft in 2011 created a "clear risk of overcapacity" in some markets but noted that the aviation industry outlook in Asia ex-Japan remained positive.