Failure to agree Open Skies deals is "delaying the recovery of a sick industry," Giovanni Bisignani, ceo of the International Air Transport Association (IATA), said.
He said a liberalisation agreement between the US and EU would add $5bn to the bottom line of the industry and was "an opportunity we cannot afford to miss."
Speaking at the International Civil Aviation Organization (ICAO) Global Symposium on Air Transport Liberalisation being held in Dubai, UAE, Mr Bisignani also called for more consolidation between airlines.
"The only way to be successful is to run the industry as a real business. Who cares who owns an airline - so long as markets are served with safe operations?" he said.
Mr Bisignani said the industry was in "desperate" need of change and only governments could bring it about.
"But too often governments are failing to provide the bold moves and leadership that is required," he said.
He said progress was "disappointing" and aviation was governed "by a 60 year-old set of rules - the bilateral system."
Mr Bisignani said that security was often mentioned as a cause for not changing but it was "false" to claim national ownership was needed for national security.
Failure to de-regulate had contributed to the industry's $40bn losses over the last five years.
Liberalisation could be shown to work. The agreement between the UK and India had seen flights double to 200 a week while the Single European Aviation Market in 1993 saw traffic double by 2005.
Despite this success only 17% of air traffic operated in a liberalised environment.
He said the North Atlantic was the "most important aviation relationship in the world" and an agreement between the US and the EU was “the critical next step to change our industry.”
But he warned the “window of opportunity” would not be open forever and to fail would be to miss out on $5bn for the industry.
But Mr Bisignani said Open Skies were only part of the answer. "But now the flags on the tails of our aircraft are so heavy they are sinking our industry. It prevents meaningful consolidation and it perpetuates inefficiency.
"The only way to be successful is to run the industry as a real business. Who cares who owns an airline - so long as markets are served with safe operations?" he said.
He said the industry now needed to change quickly and called on governments to "set targets for progressive liberalisation and lead the industry by challenging your airlines to move forward."
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