Asian airlines must prepare for major shakeup: Qantas chief

Asian airlines must prepare for major shakeup: Qantas chief

Agence France-Presse Singapore

The Asian airline industry must prepare for major structural changes to capitalize on a projected surge in travel demand, Qantas chief executive Geoff Dixon said here on 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," Dixon said at a lunch speech organized by the Asia-Pacific Aviation Media Association here.

"They result from changing market circumstances and customer requirements as well as the success of low cost airlines."

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.

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

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

Dixon said he was confident regional carriers were up to the challenge, having demonstrated resilience during the Severe Acute Respiratory Syndrome (SARS) epidemic that brought travel to a near standstill.

"Here in this region, we have some of the best equipped and managed airlines to be found anywhere. Nowhere was this more evident than in our collective response to SARS," he said.

"Market offerings were kept strictly in line with market demand. As a consequence, there was an orderly return of capacity and a containment of losses."

Dixon said air passenger traffic in the Asia-Pacific region was projected to grow 4.9 percent in 2004 and 6.8 percent in 2005.

The region now accounts for close to 20 percent of world tourism and the World Tourism Organization (WTO) expects this to climb to more than 25 percent by 2020, he said.