The fundamental problem of the aviation industry is that it is “dysfunctional, over-regulated, over-fragmented” Willie Walsh, ceo of BA, said.
Speaking at the opening session of the Association of Corporate Travel Executives' (ACTE) education conference in London, Mr Walsh said airlines were “notoriously unprofitable” and pretended they could insulate themselves from market forces.
He turned his fire particularly on American airlines which had “soaked up” up to $20bn of public subsidy and loan guarantee.
“Yet despite these fantastic sums and the protected nature of their markets, they still can't turn a profit,” he said.
“Last year North American airlines lost $9bn, while the rest of the world combined managed to stay in the black.
“This is economic madness. Four of the biggest North American - and global - carriers (United, Delta, US Airways and Northwest) are bankrupt.
“Yet they are kept alive by Chapter 11 protection - and allowed to walk away from their pensions obligations and dump capacity on international routes.”
He said Delta was now embarking on its largest ever expansion to make it the biggest transatlantic carrier.
“This is a failed, bankrupt airline that has lost $10bn over the last four years.
“Any airline from any country which becomes so disconnected from what its customers want that it generates this scale of losses should disappear from the industry - and let new, fitter, more customer-focused operators take its place,” he said.
Mr Walsh, in his first public speech since taking over at BA, said that “too much of the industry has not realised that the customer is king. There are about 300 airlines in the world - and the customer simply does not need anything like so many.
“Many carriers have come into existence through political demand rather than consumer demand. “National governments have felt they must have their own flag carrier - no matter how uneconomic - because it is some sort of international status symbol.”
With the intervention of government “a vast web of treaties and regulation has grown up to decide matters that should be determined by consumer choice in free markets.”
This had led to rules and international treaties which stopped BA flying from Rome to New York or from Heathrow to Atlanta.
Regulators, he said, also decreed that foreign ownership of an airline can never be more than 49% which stopped cross national mergers and the rationalisation that many other major industries, like car making, pharmaceuticals and electronics, had seen in the last decades.
“Only aviation has tried to stand out against rational market forces,” Mr Walsh said.
He called for a genuine liberalisation agreement on Open Skies between the EU and the US which he said could become a template for similar treaties across the world.