Comment
ASEAN's 'partly' open skies a concern
May 1st 2013
Right now, the arrival of “open skies” in Southeast Asia, planned for full implementation in 2015, is not shaping up to be the liberalization that many expected. Read More »
Some members of the 10-nation Association of South East Asian (ASEAN) bloc remain less than enthusiastic about its implementation. Indonesia, for one, continues to protect its market under lobbying pressure from its carriers.
Smaller countries such as Myanmar, Cambodia and Laos are growing increasingly concerned that open skies will threaten the survival of their carriers as they will face tough competition from airlines in more developed markets like Singapore, Malaysia and Thailand.
Unlike the single European aviation market, there will be no relaxation of national ownership rules. ASEAN carriers will not be allowed to operate between domestic destinations in other member countries. Multilateralism will be a pipedream with most air rights still negotiated bilaterally. One ASEAN country will still have the power to refuse access to airlines from another member state.
As our cover story (Mirage or reality) points out, this will even put ASEAN airlines at a disadvantage in air right agreements negotiated between ASEAN as a bloc and other countries in the region such as China and India.
In other words, the phrase “open skies” is not open skies at all. Rather, it should be “partly open skies”.
The smaller countries are understandably concerned. They face a potential onslaught from both legacy airlines and rapidly expanding budget operators such as Malaysia’s AirAsia and Indonesia’s Lion Air. The huge fleet expansion plans of these carriers threatens to flood the market with capacity.
But there are ways for smaller airlines to defend themselves, even in a completely open market environment. They need to abandon government ownership, independence or national flag status and look for opportunities to consolidate or create partnerships and regional alliances (even with equity) with bigger ASEAN carriers.
This will help them build their networks and ensure they receive access to a fair share of the traffic. There should be room for all in Southeast Asia. With a population of more than 600 million the region offers as much opportunity for growth as the boom markets of China and India.
For ASEAN carriers to take full advantage of this enormous opportunity they, and their governments, must shed protectionism and create a genuinely open aviation market, not the half-hearted regime that is emerging.
