Qantas chief executive Geoff Dixon has tipped the global aviation industry to consolidate into a few, very large players as carriers struggle to cope with higher fuel costs.
Mr Dixon also disagreed with claims that Air New Zealand was too small to be a takeover target, but added that this didn't imply that Qantas was interested in buying the kiwi carrier.
Just days after announcing 1,500 job cuts at Qantas, Mr Dixon said globalisation, accelerated by permanently higher fuel prices, would result in a "new aviation world order".
"Right now the global aviation industry faces not just a shock or indeed a blip or indeed a crisis really but a permanent transformation," he told a business lunch in Sydney.
Cross-border merger and acquisition activity between airlines is currently prevented by strict foreign ownership rules in individual countries.
Mr Dixon said he was encouraged by current negotiations on an aviation agreement between the US and European Union.
"The EU's push for the abolition of foreign investment restrictions has so far - believe it or not - been resisted by the US, which limits foreign ownership of its airlines to 25 per cent of total voting stock," Mr Dixon said.
Mr Dixon said there were signs that the US may be prepared to accept airlines from Europe and potentially from other countries, based on their principal place of business rather than on strict ownership criteria.
"For us this would be a ground-breaking development," he said.
"It would open the way for airlines to engage in meaningful cross-border investments, and sooner or later it will happen.
"And we believe strongly at Qantas that over time, consolidation will transform aviation.
"It will produce a few very large and extremely efficient global airlines with a portfolio of interests and a portfolio of brands - the brands won't go.
When asked if Air New Zealand was a possible takeover target, Mr Dixon said that he disagreed with its chief executive's claims that the kiwi carrier was small enough to stay underneath the radar.
"I think it's changing so much that you won't be able to stay under the radar.
"And although I'm not going to say that Qantas and Air New Zealand are going to get together - we tried that once and we've moved on - I do believe very strongly and always have that consolidation will happen.
"Consolidation when it starts will be very erratic and I don't believe any airline, particularly in this part of the world, will be able to avoid consolidation."
"I'm not suggesting that's going to be Qantas and Air New Zealand but it's a small country, it's a difficult business (and) scale will be very, very important."
Mr Dixon said Qantas had positioned itself to avoid being swallowed up by investing in its business, cutting costs were appropriate, ordering more fuel efficient aircraft and developing a strong brand.
"The work that Qantas has done to date means that we will avoid any such dark destiny."