Asean Open Skies Agreement Benefits

As a result of the opening of their local markets by Member States, the ASEAN single market offers many opportunities for new airlines. On the other hand, the increase in the number of airlines will lead to lower prices due to increased competition. Increased air traffic, thanks to price competitiveness, will have a ripp wave effect that will allow related industries such as freight, ground-handling and advisory services to thrive. Indonesia and the Philippines also objected to some of the elements proposed in the ASEAN Open Airspace Agreement, namely the easing of third, fourth and fifth freedoms. Yusof added that, in addition to the reluctance of some countries to open up fully in the open skies, huge differences in economic growth and differences in monetary values will influence the success of political implementation. There is no doubt that ASEAN open skies is an advantageous policy that will benefit industry players throughout the ASEAN region. While the concept of a fully unified air transport market is full of benefits, one wonders if it is really as good as it sounds. As with all things, there are pros and cons: „Open skies will not serve airlines like Malaysia Airlines Bhd, but airAsia will, because its strategy was very effective in reaching places – intra-Asian segments that were not fully served by other airlines before.“ For airlines, increased competition could result in less competitive airlines being stifled by more powerful competitors. This could pave the way for merger and acquisition activities as airline policy in Asean evolves, Ali adds. Currently, most Asean countries require that their airlines be mostly controlled by indigenous peoples.

Although an agreement in principle has helped to strengthen connectivity between the ten ASEAN countries, the region is still far from having a genuine single aviation market, with some Member States yet fully having to ratify multilateral air services agreements. The Philippines has recently eased its restrictions, but Indonesia and Laos continue to restrict free access to their largest markets. But Shukor Yusof, an aviation analyst and founder of Malaysia-based Endau Analytics, said the ASEAN open skies may not bring much benefit because of the industry`s lucrativity. „Asean is now an LCC market – in fact, the figures show that more than 60% of traffic in the region is already covered and growing by CFCs,“ professor Alan Tan, an aviation law expert at the National University of Singapore, told The Edge. „But as soon as the implementation of the Asean Open Skies is fully implemented, the full service sector will be even more efficient.“ ASEAN`s open skis cannot be fully operated without the availability of adequate infrastructure. Despite the fact that support for airports is essential, not all ASEAN airports are open to this policy. In the best interests of their local industry, some Member States limit their „openness“ to ASEAN open skies policy. Of course, this can reduce potential opportunities for many airlines.

ASEAN`s internal aviation market policy will take over from existing bilateral and multilateral air services agreements between Member States that are incompatible with their rules. Certainly this list is not exhaustive – there are many other benefits (and other effects) that ASEAN`s open ski policy brings and will bring. Member States must strive to continue harmonising the region in order to promote this policy in the direction of a genuine internal aviation market. While the third and fourth freedoms are already a common practice in the ASEAN region, ASEAN-SAM would grant the fifth freedoms, leaving the right of the seventh freedom in the air. However, there will be no