The Centre for Asia Pacific Aviation (CAPA) is making the gloomy prediction that if airlines fail to follow the model of low-cost carriers, they will be driven from the market.

"Any new entrant must be low cost and any existing airline not heeding this message will become an ex-airline," said CAPA executive chairman Peter Harbison.

More alarming was Mr Harbison's warning that the rapid rise of the low-cost carriers will pose a greater threat to the survival of major airlines than consolidation in the industry.

"Talk of the coming consolidation among airlines is nonsense," said Mr Harbison in an article by e-Travel Blackboard. "Who is going to consolidate? Not Singapore Airlines and Thai Airways? Large scale consolidation won't happen - it's just too difficult, and the market is expanding too fast."

The report said regardless of whether these dire warnings prove true, 2007 is expected to be one of change for the industry in the Asia Pacific region, following the opening of domestic aviation markets to foreign rivals. The year will also be marked by preparations for the Asean agreement in 2008.