Southeast Asia still significantly lags Europe in deregulating the aviation sector despite moves to liberalise air travel, the International Air Transport Association said Oct. 31.

Mike Barclay, regional vice president of the body, commonly known as IATA, said a string of regulations obstructed carriers in the region and hampered the industry's growth.

"We don't see any relaxation of foreign ownership controls ... we don't see the opportunity for airlines to operate domestic sectors in another ASEAN country," Barclay said at an aviation conference in Singapore.

"So I think there is a long way to go."

ASEAN is the 10-member Association of Southeast Asian Nations, which wants airlines from member nations to be free to fly between regional capital cities by the end of 2008 under an open-skies agreement.

Barclay said deregulation over the last 15 years had forced airlines in Europe, such as Lufthansa and British Airways, to shape up.

"They have adapted, they have re-engineered themselves, they are now very strong," he said.

ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.