Menu
Business

ASEAN “Open Skies” Still Has a Way to Go

ASEAN member nations have a way to go before its Single Aviation Market (ASEAN-SAM)—more commonly known as “Open Skies” policy—is in full effect. Even before considering liberalization of Southeast Asia’s air transportation network, this unified market needs to be accepted to a greater degree by some holdout members, particularly Indonesia, and by emerging nations that are slower in getting up to speed with certain of the policy’s requirements.

The Open Skies policy is considered crucial for Southeast Asia’s aviation network to remain competitive with other, larger aviation industries.

“Failure by ASEAN nations’ to forge a truly single [aviation] market and a common negotiating [position] would cause risk disadvantaging airlines from larger markets such as China,” commented Alan Khee-Jin Tan, an aviation scholar in Singapore.

At a recent Open Skies conference in Bangkok, Tan’s comments seemed more optimistic, with him stating that he believed member nations would eventually work through the challenges with the greater goal of the ASEAN Economic Community (AEC) launch in mind.

AsiaOne reports, “according to Tan, the reality however is that progress is likely to be slow, as big players like Indonesia continue to hold out on relatively modest issues like third- and fourth-freedom passenger rights, and even air-freight services.”

Open Skies Policy – “Freedoms of the Air”  

  • Third- and fourth-freedom rights: The right to fly from an airline’s home country to a foreign country, and vice versa, without government approval.
  • Fifth-freedom rights: The right to fly between two foreign countries during flights originating or ending in an airline’s home country.
  • Seventh-freedom rights: The right to fly between two foreign countries while not offering flights to an airline’s home country.

ASEAN’s director of finance, industry, and infrastructure, Tran Dong Phuong, spoke at the conference, saying that all member nations in the region were on track for the “fifth-freedom” agreement.

Still, Phuong also stated that there has been “over expectation” and “misunderstanding” about fully liberalized air services coming into effect by the end of this year.

“Less developed member countries need longer to meet commitments. You know ASEAN’s way—it’s a voluntary basis and we keep convincing them.”

Experts believe that full liberalization will encourage faster growth and development in the industry, due to the increased competition overall. This competition, of course, will initially be embraced in varying degrees, depending on which member country you ask. Myanmar has expressed reluctance about other airlines moving in on its relatively small airline industry.

Changes in aviation security and air traffic management are also included in the Open Skies policy, as following the recent air tragedies the past year this is understandably of interest to many.

An aviation expert in Indonesia has expressed concern over the increased frequency of flights within the region once Open Skies is implemented further. A busy flight path near Belitung Island, where Indonesia AirAsia Flight 8501 last contacted air traffic control, was listed as an example.

Malaysia on the other hand seems much less wary of what Open Skies will bring, as they stand to gain a lot. Malaysia-based AirAsia already operates subsidiaries in multiple Southeast Asian countries, and this popular low-cost carrier (LCC) will probably see increased efficiency, leading to noticeable growth in a liberalized market. What’s more, Malaysia’s infrastructure is superb in comparison to Indonesia and the Philippines, making it an ideal candidate as a hub for increased air traffic.

In all, there has been a lot of talk (and varying reports) on the pace of progress. The takeaway, at this time, seems to be that ASEAN member nations are going to need to spend a great deal of time to hammer out the particulars, given that several member nations seek a more level playing field before officially moving forward.

H/T: AsiaOne