WEF seeks airline ownership liberalisation
GOVERNMENTS should allow 100-per-cent foreign ownership of airlines to spur growth in the global aviation and tourism industries, the World Economic Forum said yesterday. The Swiss non-profit foundation called for the elimination of the “nationality rule
“This rule limits airlines’ potential investors, thereby increasing the cost of capital,” it said at the opening of a two-day WEF-Asean conference in Kuala Lumpur.
“It also denies airlines the opportunity to use transnational mergers or foreign subsidiaries to achieve efficiencies of size and scope, to fully integrate their networks in order to offer passengers expanded route selections, and to benefit from knowledge transfer between management groups,” it said.
The rule, generally written into national law with variations among countries, usually limits foreign ownership of airlines to about 49 per cent. The majority of shares should be owned by nationals of the country where the airline is based.
Unlike airlines, airports in many countries have been successfully liberalised, allowing foreign ownership, the WEF said.
“Over the past few decades, countries have increasingly allowed their airports to be transformed from cash-starved, state-owned monopolies to privatised entities open to global investors,” it said.
“The change has brought in much-needed capital for infrastructure investments and allowed airports to reap the benefits of world-class management expertise and efficiencies of scale, resulting in improved financial performance.”
Tony Fernandes, chief executive officer of Asia’s largest budget airline AirAsia, said that allowing 100-per-cent foreign ownership of airlines would boost global travel and tourism.
Strict ownership regulations have led to AirAsia’s complicated business structures. The airline operates separate units for Thailand, the Philippines and Japan.
The European Union has taken the lead in opening up airline ownership, he said.
Meanwhile, Thailand is showcasing to the world market its potential to be a stronger economy and ability to become the centre of Asean during the WEF-Asean conference.
Commerce Minister Apiradi Tantraporn said that after the full integration of Asean late last year, the global community had paid much attention to the region.
“As part of the regional integration, thus, we will show our potential to become the centre of doing various businesses and investment.”
Not only government officials from each nation are taking part in the meeting, but also leading investors and businesspeople in the region.
Topics for discussion include “Shaping the Asean Agenda for Inclusion and Growth”, which will be divided into three subjects – driving sustainable growth, Industrial Revolution 4.0, and the strengthening of regional relationships.
Apiradi said the meeting would also discuss the future of Asean, the role of economic integration, innovation and the “digital economy”, energy, the revolution of manufacturing structure, and accessibility of sources of funds.
