Friday, 28 February 2014

ASEAN's open-skies dream

By Karamjit Kaur, The Straits Times, 27 Feb 2014

IN A new world being conceived by the end of next year, Singapore Airlines (SIA), SilkAir, Thai Airways and other ASEAN carriers will fly freely across the region to any airport and as often as they want.

Today, such flights are restricted by government-to-government deals that dictate how often carriers can fly between two points and the number of passengers they can carry.

ASEAN's ultimate goal is a single aviation market. Among other things, this would mean that the longstanding walls that now prevent an airline from holding a majority share in a carrier in another ASEAN country will come down. Airlines in the region would then be free to merge across borders if it makes business sense to do so.

But the more immediate goal is less ambitious. It involves allowing ASEAN carriers to fly with fewer restrictions within the region by the end of next year.

The challenge, of course, is in implementation and it is here that plans may go into a tailspin.

In November 2004, the ASEAN transport ministers who met in Cambodia drafted a 10-year plan under which the region's air travel sector would be progressively integrated and liberalised.

Three years later, when transport ministers held their annual meeting in Singapore, they agreed to push for open skies within ASEAN by the end of 2015.

What ASEAN refers to as an "open skies" agreement, however, is limited to what the industry regards as the exercise of unlimited third, fourth and fifth freedoms.

The first two freedoms - the right for an airline to fly over foreign airspace without landing and the right to stop in another country for refuelling or maintenance - are already common practice.

Unlimited third freedom is when an airline is able to fly from its home country to an airport in another country without the need for prior inter-governmental approval. The fourth is when it flies back home.

The fifth freedom in ASEAN's "open skies" scenario involves an airline flying to an airport in country A and from there to country B before heading back - again without the need for inter-governmental approval.

All this assumes, of course, that the carriers concerned have the necessary safety and other regulatory approvals to operate flights.

In its pure form, however, open skies would involve much more than this. For example, an airline would have the right to park its planes and operate domestic flights in another country.

With the 2015 deadline looming, however, not everyone is convinced that ASEAN's target for the unrestricted exercise of the third, fourth and fifth freedoms will be met.

Eight ASEAN member states have ratified the agreement. The Philippines is expected to agree soon, but there is a question mark over whether Indonesia will agree.

Aviation law academic Alan Tan of the National University of Singapore said: "Since Indonesia constitutes half of ASEAN's population, it's a huge gap. It's a bit like the European Union doing this without France, Germany and Britain combined."

So what is preventing Indonesia from inking ASEAN's Multilateral Agreement on Air Services and the Multilateral Agreement for Full Liberalisation of Passenger Air Services?

It could be fear that local airlines may not be able to compete against stronger carriers from fellow ASEAN countries.

As the biggest country within the bloc, Indonesia may also be wary about giving away too much.

Open skies would give SIA, for example, access to tens of airports in Indonesia. But its national airline Garuda would be able to fly only to Changi Airport, the main airport in Singapore for commercial flights.

Still, ASEAN has made good progress. A significant milestone was reached in 2008 between Singapore and Malaysia when budget carriers were allowed to fly between Singapore and Kuala Lumpur. And Indonesia has also allowed airlines from neighbouring countries to mount more flights to Jakarta and other key cities.

But such liberalisation will be meaningless if the infrastructure cannot cope.

What is the point of lifting air restrictions if passenger terminals are bursting at their seams? Or air traffic controllers cannot cope with a growing number of flights? Or airlines cannot secure landing slots because there are not enough runways?

In Singapore, Changi Airport's Terminal 4 will be ready in 2017. By the middle of the next decade, Terminal 5, which will be able to handle up to 50 million passengers a year, will open.

By then, Changi will be able to cope with 135 million passengers a year. A third runway will be operational by the end of this decade.

But not all airports are growing so rapidly. To relieve congestion at Indonesia's Soekarno-Hatta airport, Jakarta's old airport Halim recently re-opened to scheduled commercial passenger jet flights. But Halim is able to support only a small number of commercial flights.

In Kuala Lumpur, the opening of KLIA2 - Asia's biggest budget carrier terminal - is expected to be delayed again after two-thirds of the building recently failed fire and safety standard checks.

The terminal currently scheduled for a May opening is already more than two years late.

With demand for air travel in the Asia-Pacific expected to triple by 2030, industry experts have also warned of massive delays and congestion for travellers if air traffic systems are not upgraded and modernised.

In 2012, Singapore announced plans to spend $200 million in research on air traffic management.

The findings will be shared with other countries in the region.

ASEAN's vision for a new liberalised air transport framework will reap significant benefits for travellers and member states. For this to happen, however, the different pieces of the puzzle need to fall in place.

A similar initiative in Africa, which started more than 20 years ago, has yet to take off.

It would be a shame if ASEAN fails to fulfil its open skies dream.

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