Asian airlines need shakeup

The Asian airline industry must prepare for major structural changes to capitalise on a projected surge in travel demand, Qantas chief executive Geoff Dixon said here Thursday.

Changes in the travel market, customer needs and the success of no-frills carriers are putting pressure on the industry to consolidate and innovate traditional business models, he said.

"The underlying pressures for structural change are intensifying on a daily basis ... They result from changing market circumstances and customer requirements as well as the success of low cost airlines," Dixon said at a lunch speech organised by the Asia-Pacific Aviation Media Association here.

Dixon said several airlines have "found it necessary to review their business models, find greater efficiencies and look at opportunities for consolidation."

At the same time, he argued that government regulatory agencies are blocking the consolidation of the airline industry.

"Consolidation is necessary and inevitable. The stumbling bloc is outmoded regulatory frameworks," he said.

"National governments, through their regulatory agencies, continue to constrain the consolidation of airlines which is necessary for them to achieve scale.

"Aviation should be moving rapidly down a similar path to industries like vehicle industry, manufacturing and telecommunications."

A proposed multi-million dollar alliance between the Australian flag carrier and Air New Zealand has been held up by regulators in the two countries, who deem the move against the public's interest.

"This case demonstrates that consolidation cannot happen without a regulatory mindset that is attuned to the big, long-term picture rather than the short-term impact on individual markets," Dixon said.