ASEAN Open Skies seem a distant dream as the association missed the deadline of December 31, 2015 for a complete transparent liberalization of air transport conditions. The analysis was shared by experts to the air transport magazine Orient Aviation in its latest issue.
In the article, Kuala Lumpur-based Endau Analytics analyst, Shukor Yusof, said to Orient Aviation that the bloc is “a long way from becoming a single aviation market given the reluctance of some member states, namely Indonesia and the Philippines, to engage in a long-term initiative to be less protectionist about their markets. Both these countries have yet to ratify the scheme. Indonesia is only allowing Jakarta to participate while the Philippines has opened all of its cities to ASEAN open skies except its main hub in Manila. I am not fully convinced there is sufficient political will, at least this year, for anything constructive to take place in the near term”.
The agreement does not include domestic cabotage, which means that an ASEAN carrier from a third country will not be able to carry passengers on a domestic route, such as Bangkok-Phuket or Kuala Lumpur-Kuching. Seventh freedom rights – a right to fly for an airline between points in two other countries is also not allowed. For example, Garuda flying between Kota Kinabalu (Malaysia) and Zamboanga (Philippines).
A major hurdle to liberalisation is that each ASEAN member looks into its own interest when coming to the air transport issue. While a country such as Singapore has seen a necessity to assure a free access to any airlines in a move to turn the City Island into a powerful aviation hub, a country such as Laos is just looking at all possible ways to protect its national carrier. Among the most liberal countries are Singapore, Malaysia, Thailand and -surprisingly- Cambodia; in the middle point is Brunei, Myanmar and Vietnam while Indonesia, Laos and the Philippines are the most conservative in their approach to liberalization.
Indonesia only opened so far Jakarta to competition and partially Medan, Surabaya and Bali. All the other airports are subject to negotiations on a case-to-case basis. The Philippines by contrary want to push regional airports over Manila, talking always about slot constraints of Ninoy Aquino International Airport (NAIA), the main gateway to the country. This is of course true but there is certainly scope to “squeeze” a few more ASEAN flights by reducing the gap between two flights during less crowded period during the day. Laos is still reluctant to open up to Thai carriers, especially low cost ones.
Laos remains today the country with the smallest share of low cost carriers. Thai AirAsia for example has been denied flying to Vientiane -despite the supposedly active ASEAN open-sky agreement between capital cities-, not to mention about the UNESCO World Heritage City of Luang Prabang. Vietnamese government did its best so far to limit the influence of foreign investors in its air transport. Jetstar (Qantas) had to resell its shares to Vietnam Airlines in its subsidiary Jetstar Pacific to finally get the full nod of Vietnamese authorities to its expansion. While AirAsia has been forced to walk out of a joint venture for an airline which finally came out as Vietjet, a low cost carrier fully owned by Vietnamese company Sovico Holdings and Vietnam HD Bank.
Would ASEAN skies look one day like European Union skies where any EU-registered carrier can fly between any point within the European Union airspace? This seems an elusive idea for now according to Dr. Alan Tan, Professor of Law at National University of Singapore, an acknowledged aviation legal expert.
Talking to Orient Aviation, he explained that a great deal of work remains to be done to achieve economic and market integration of the ASEAN aviation sector. Additionally, technical and regulatory integration within the block are in their very early stages of development. “It is likely Asam (ASEAN Single Aviation Market) will have to be extended, or have a second stage declared for the post-2015 period, to tackle unfinished business and new matters. In other words, Asam remains very much a work in progress,” he highlighted to the magazine.
A complete open skies policy would certainly boost air traffic in the region and give a chance to many secondary destinations to gain entrance to international markets. it is surprising that a decade after the first steps to liberalize air transport in ASEAN, they are still no flights between Brunei and Makassar or Manado in Sulawesi; Yogyakarta and Bangkok; Hue (Vietnam) and Bangkok; Puerto Princesa (Palawan, Philippines) and Singapore.
The main reason behind authorities dragging their feet to fully embrace ASEAN open skies is probably the loss of sovereignty for ASEAN countries respective carriers and the possible merger between airline players- a scenario which occurred in the EU following the establishment of a single sky (Air France/KLM; Lufthansa/Austrian/Swiss and British Airways/Iberia/Aer Lingus). Difficult to envision now that Lao Airlines could be part of Thai Airways or that Singapore Airlines and PAL could merge… Although Cambodia is an example of a country with a small national carrier being part of Vietnam Airlines!
So far, only the AirAsia group has been able to go around the rules of the limited ASEAN Open Skies agreement. AirAsia created subsidiary in some of ASEAN largest countries -Malaysia, Thailand, Indonesia and the Philippines- and it is still looking at more opportunities for new affiliates. All the AirAsia Group’s airlines work together criss-crossing the entire ASEAN. Which pushes AirAsia founder Tony Fernandes to request having an ASEAN common aviation regulator to look to standardize and harmonize air transport rules within the AEC such as a single air traffic management system. Once more, it would mean for ASEAN states to give up part of their sovereignty. Not really an attractive idea for the time being!