Year End Review: Liberalisation
Not in my backyard
December 1st 2015
Airlines may have spent decades arguing they are a global business and they need open markets and liberalized skies to reach their full potential. Read More » But 2015 has produced some worrying signs that there are open markets – and then there are markets that are far too open. The big debate of the year has been the ferocious war of words between America’s big three – American Airlines, Delta Air Lines and United Airlines and the Gulf trio of Emirates Airline, Etihad Airways and Qatar Airways.
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The U.S. airlines accused the Gulf trio of profiting from subsidies and their expansion into the U.S. curtailed. This controversy is far from resolved, but such disputes are not confined to North America. European airlines, too, have been demanding a freeze on new rights for Gulf carriers.
In the Asia-Pacific, some airlines have been growing increasingly restless about the Middle East onslaught. Thai Airways International (THAI) president, Charamporn Jotikasthira, strongly suggested Thailand’s open skies policy was a major contributor to THAI’s poor performance. He said the policy allowed foreign carriers, i.e. the Gulf airlines, to fly to Thailand then fly on, selling cheap tickets, to other destinations in Asia.
In Australia, Qantas Airways has been heavily lobbying the administration under the new Prime Minister, Malcolm Turnbull, against allowing overseas carriers to move deeper into the Australian market. The airline is concerned foreign airlines will be able fly domestic routes, which Qantas pointed out is not permitted in any other developed nation.
In the Philippines, flag carrier Philippine Airlines (PAL) was miffed when airlines from the United Arab Emirates (UAE) were recently given additional air rights (on the understanding that a year on they will fly to centres other than Manila) into the Philippines.
Around the region, there are mutterings that liberalization is getting out of hand as the increased traffic rights handed to foreign carriers allow them to make serious inroads into the home airlines’ traditional markets.
The issue will likely intensify in coming months. Many governments take the view that agreeing to foreign airline demands makes economic sense because ultimately more air traffic, whoever operates it, brings more tourists and more business travelers to their economies.
