Asean open skies on track despite tragedies

The policy, however, is expected to pay more attention to having higher safety standards and other regulatory approvals to operate flights, among others, when it is fully implemented by the end of 2015.

Although the road to open skies is not completely clear of obstacles, some Asean airlines, particularly low-cost carriers, already positioning themselves for the Asean open skies.

Analysts said the higher safety standards are not entirely due to the two catastrophes involving aircraft from Malaysia and Indonesia. Asean members, they said, had always worked towards their respective safety security compliance.

“It is not something they hastily prepared in the wake of the airline tragedies. Safety has always been paramount in the aviation industry. No airlines will compromise on safety issue. It [safety] will always be their top priority,” an aviation analyst said.

Industry players said the Asean open skies policy not only provides member countries with the liberalisation of air service, but also includes aviation safety, aviation security, air-traffic management, civil-aviation technology, aviation environment protection and air-transport regulatory framework.

This year has been the worst for the aviation sector in the region, where airlines have been hit by high operating costs largely due to fuel prices. But since June last year, the cost of fuel has come down but a spate of tragedies has cast a shadow over the airline companies.

On March 8, Malaysia Airlines (MAS) flight MH370 went missing after leaving Kuala Lumpur en route to Beijing, while in July, another MAS jet was shot down when flying over a rebel-controlled area in Ukraine.

The latest air tragedy happened on Sunday when AirAsia Indonesia flight QZ8501 went missing and was later found to have crashed after leaving Surabaya for Singapore.

Analysts and industry officials said airlines had always not compromised on safety issues and that the MH370 tragedy was a rarity.

International Air Transport Association (IATA) CEO Tony Tyler had said that right from the beginning there was an understanding among governments and industry players that safety was “not a competitive issue”. He said there has always been great cooperation among all the industry’s stakeholders in efforts to make flying ever safer.

Tyler said IATA was working with its partners towards some recommendations on how to better track aircraft. There is some promising technology that will become available in the near future.

Meanwhile, industry players and analysts are excited with the impending policy, which is expected to take place this year, as it will be a boon to Asean carriers.

 

Greater growth expected

Analysts said the open skies policy would likely see greater growth and development as airlines in the region were spurred to greater competition.

“With the Asean open skies policy being implemented next year, there would be higher air travel demand in the region, as well as an increase in passenger traffic and movement of goods. This will add a new dimension of growth for the country,” a bank-backed analyst said, adding that Malaysia was one of the major beneficiaries of the policy.

The Asean open skies policy, introduced as part of the Asean Economic Community, is expected to transform the aviation industry by allowing for more liberalisation between the regional aviation markets, thus encouraging greater connectivity, higher traffic growth and service quality, while lowering ticket prices.

In essence, all Asean member countries will open up their international airports to each other, with no regulatory limit in terms of frequency or capacity.

Maybank Investment Bank analyst Mohshin Aziz said there was much to cheer upon the launch of the Asean open skies in 2015.

He said upon closer scrutiny, many of the advertised benefits were just a mirage. For example, open skies exist for capital cities, but there is a cap on slots so it amounts to no net benefit.

A fifth freedom enables an airline to fly to two countries with a flight that originates or ends in its home country. For instance, an aircraft can take off from Kuala Lumpur, pick up passengers in Bangkok before stopping in Hanoi.

Some players argued that true liberalisation would ensure seventh freedom rights, whereby airliners get the right to transport passengers between two foreign countries without offering flights to one’s home country. 

For instance, an airline from Kuala Lumpur can operate between Jakarta and Singapore without having to return to its home base.

It has been reported that the Asean open skies policy has been ratified by all Asean countries except for the Philippines. 

So, who will benefit and who will rule Asean skies?

In a report, UOB Kay Hian said AirAsia and airport operators such as Malaysia Airports Holdings would benefit from the ratification of Asean open skies.

“The two dominant low-cost carriers in Asean – Lion Air and AirAsia – will be the main beneficiaries.”