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Open Skies in ASEAN


ASEAN was established in 1967 initially with five member countries, namely Indonesia, Malaysia, Philippines, Singapore and Thailand. Its membership increased over time with Brunei Darussalam joining in 1984, followed by Viet Nam in 1995, Lao People's Democratic Republic and Myanmar in 1997, and Cambodia in 1999. ASEAN was formed to promote regional peace, prosperity and stability. It has a total population of about 558 million as of 2006 with a combined gross domestic product of US$1,047 billion and a total trade of US$1,405 billion (Table 1 [ PDF 27.1KB | 1 page ]). The importance of trade to the countries in the region can be seen from the same Table where seven out of the nine countries shown (excluding Brunei Darussalam ) have a trade to Gross Domestic Product (GDP) ratio of more than 100%, with Singapore and Malaysia having the greatest dependency on trade in the region.

Given the importance of trade in ASEAN, member countries have recognized that transport is an important area for cooperation as it can contribute toward the reduction of trade transaction costs for member countries and the region as a whole. In this section, open skies in ASEAN is reviewed at three levels: (i) ASEAN-wide initiatives, (ii) sub-regional initiatives within ASEAN and, (iii) unilateral initiatives.

The initial focus as shown in the ASEAN Plan of Action in Transport and Communications 1994–1996 was on the development of multi-modal transport and trade facilitation, improving ASEAN inter-connectivity in telecommunications, harmonization of road transport laws, rules and regulations, the development of rules and regulations for the carriage of dangerous goods and industrial waste on land and sea, as well as human resources development in transport and communications (ASEAN Secretariat undated (a), http://www.aseansec.org/7373.htm. Accessed 14 April 2008). In the case of aviation, the improvement of air space management in ASEAN was emphasized with no initiatives then to liberalize air services in ASEAN.

Subsequently, the development of a competitive air services policy was included as one item of the integrated implementation program for the ASEAN Plan of Action in Transport and Communications in 1997 (ASEAN Secretariat undated (b), http://www.aseansec.org/7819.htm Accessed 15 May 2008). This was targeted at the ASEAN Sub-regional Groupings/Growth Areas. The development of an ASEAN Open-Sky Policy was also considered as another area of possible cooperation. An internal ASEAN Secretariat study on “Preparing ASEAN for Open Sky” was commissioned.

Later in 2002, the ASEAN Memorandum of Understanding (MOU) on Air Freight Services was inked (Table 2 [ PDF 29.5KB | 1 page ]). However, contracting parties are allowed to operate only all-cargo services up to 100 tons weekly based on a point-to-point route, with no limitations on frequency and aircraft type. Third and Fourth Freedom Rights are included in this agreement.1 In 2007, the agreement was amended to increase the permitted capacity to 250 tons weekly.

Limited open skies agreements were also ratified within a small sub-set of ASEAN member countries as in the case of the Cambodia, Lao People's Democratic Republic, Myanmar and Viet Nam (CLMV) regional air services agreements and the Brunei Darussalam, Indonesia, Malaysia and the Philippines BIMP-EAGA Agreement (Forsyth et al. 2004). A roadmap was also developed for the Indonesia, Malaysia and Thailand Growth Triangle (IMT-GT). Singapore, together with Brunei Darussalam , Cambodia and Thailand, concluded a Multilateral Agreement on the Full Liberalization of All Cargo Air Services in 2003 that allows carriers from the four countries to operate unlimited all-cargo services between and via each of the countries that is party to the agreement (http://app.info.gov.sg Accessed 4 February 2008). In 2004, Singapore, Brunei Darussalam and Thailand concluded a similar multilateral agreement for passenger services, providing for unlimited direct flights between any destination in the three countries.

In October 2003, the ASEAN leaders signed the Declaration of ASEAN Concord II (Bali Concord II) that aims at establishing an ASEAN Community by 2020. This Community is made up of three pillars, namely the “ASEAN Security Community,” “ASEAN Economic Community,” and “ASEAN Socio-cultural Community.” Both liberalization and cooperation measures are used for the realization of a fully integrated economic community. A progressive approach is used for liberalization with the selection of 11 priority sectors, including air travel and tourism, for accelerated scheduled liberalization by 2010.

The Roadmap for Integration of Air Travel Sector, 2004 covers the liberalization of both passenger and cargo air services. Although full liberalization of ASEAN airfreight and passenger services is targeted by December 2008, it is expected that air traffic will be liberalized only between the capital cities for designated airlines of the member countries that will be ratifying the agreement, based on the ASEAN-X principle. Third, Fourth and Fifth Freedom Rights2 are also expected to be granted to the member countries that ratify the agreement while no restrictions on capacity, frequency, and aircraft types are anticipated. Member countries that are most likely to ratify the agreement under the ASEAN-X principle are Malaysia, Singapore, and Thailand while other members, especially the CLMV countries, may delay liberalization until 2015.

By 2010, it is envisaged that air traffic will be liberalized for all the international airports of member countries that ratify the agreement, together with Third, Fourth, and Fifth Freedom Rights.3 All ASEAN members are expected to open up their international airports by 2015 under the ASEAN Single Aviation market.

Individual member countries have their own respective open sky arrangements with non- ASEAN countries. For example, Singapore has followed an open skies policy since the 1960s (Bowen 2000). The traffic rights secured for Singapore Airlines under Singapore's open skies strategy have been integral to the carrier's emergence as one of the world's largest airlines despite its very small domestic traffic base. Thailand, the Philippines, and Indonesia also have limited or partially open skies. Malaysia has open skies agreements with the US; Taipei,China; New Zealand; Austria; United Arab Emirates; Yemen; and the Scandinavian countries apart from 86 bilateral air service agreements (BASAs).

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    The views expressed in this paper are the views of the authors and do not necessarily reflect the views or policies of the Asian Development Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.

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