Contributor - Asia

Jennifer Meszaros

In the 49 years since its conception, the 10-member Association of Southeast&nbsp;Asia Nations (Asean)&nbsp;has been gradually moving towards greater liberalization of its air transport services. In line with this strategy is the Asean Single Aviation Market (ASAM)–an ambitious open-skies scheme that was intended to further liberalize air services under a unified air transport market by the end of 2015.

 


Asean’s self-imposed deadline has now come and gone, with three members–the Philippines, Indonesia and Laos–reluctant to ratify the full agreement. The plan was for all carriers from Asean to enjoy unlimited third, fourth and fifth freedom operations within the region. To date, Indonesia remains opposed to opening up its secondary cities, the Philippines has excluded Manila from the agreement and Laos has yet to free up Luang Prabang and the national capital Vientiane. &nbsp;

 


Given that Indonesia and the Philippines are Asean’s two largest nations by population, their decision to stay out prevents the project from being fully realized. At the same time, the ASAM liberalization agenda remains relatively modest. Only third, fourth and fifth freedoms are currently being considered, while seventh-freedom relaxations and the right to cabotage have yet to be addressed. Accordingly, the ASAM falls short of a true open skies policy.

 


The third-, fourth- and fifth-freedoms are addressed in two multilateral agreements that have already come into force. The multilateral agreement on air services (MAAS) liberalizes market restrictions among Asean capital cities while the multilateral agreement for the full liberalization of passenger air services (MAFLPAS) frees up secondary cities and sub regions.

 


Indonesia has agreed to open access to Jakarta but has yet to ratify relevant protocols under MAFLPAS. As such, traffic rights into points other than Jakarta remain restricted by existing bilateral air services agreements.

 


Indonesia’s decision to refrain from joining a true ASAM is due largely to it wanting to protect against competitors, particularly from Singapore and Malaysia. Indonesia has the ability to offer regional carriers hundreds of unlimited access points, while many countries can offer only one point of access. This systematic imbalance for exchange of traffic rights has led Indonesian carriers, such as Garuda, to lobby their government to refrain from entering into&nbsp;Asean&nbsp;multilateral agreements.

 


While airlines from other Asean states now have unlimited rights to fly into Jakarta from their own capitals, it is well known that there is limited slot capacity at Jakarta’s congested Soekarno-Hatta Airport. Built to handle 22 million passengers annually, the airport currently handles roughly three times that volume.

 


An $805 million expansion plan of Soekarna-Hatta is currently underway that aims to boost passenger capacity to 62 million people. However, according to the International Air Transport Association (IATA), the capacity problem plaguing Jakarta is nowhere near being solved, even with the terminal upgrades. IATA estimates that Indonesia could be serving 270 million passengers by 2034

 


Meanwhile, the Philippines has opted to exclude Manila’s Ninoy Aquino International Airport from the agreement, citing runway congestion and a shortage of airport slots. The airport’s four terminals have a combined design capacity of 31 million passengers. In 2015, Manila handled 36 million passengers, representing an increase of 7.6 percent increase from the previous year.

 


As an alternative, the Philippines has agreed to liberalize secondary cities under MAFLPAS, including Clark International, which is already open to Asean carriers. &nbsp;While Clark has the available infrastructure capacity, the airport is 62 miles from Metro Manila with very little connectivity infrastructure available.

 


“In pockets of Southeast Asia, such as Jakarta and Manila, there is substantial growth opportunity, but the chronic lack of infrastructure is stifling that demand with no magic wand to change in the short term,” said Mark Clarkson, business development director for Asia Pacific at OAG.

 


Clarkson said that smaller regional airports will eventually emerge to absorb some of the growth. Infrastructure developments are also underway in several Asean countries including a $3 billion plan to expand Singapore’s Changi airport with a fifth terminal and a $100 million project in Cambodia to upgrade passenger terminals at Phnom Penh and Siem Reap.

 


In Thailand, both Bangkok Suvarnabhumi International Airport and Don Mueang are earmarked for expansion. Vietnam is also poised to expand provincial airports and build a new gateway airport to serve Ho Chi Minh City.

News about bills, laws, regulations and other governmental decisions affecting aviation and aerospace. Topics include FAA re-authorizations, taxes on fuel and aviation activities, environmental legislation, ICAO decisions, governmental mediation of labor conflicts and World Trade Organization disputes and decisions.

Protectionism Still Winning as Liberalization Stalls

Asean nations have treaties in place that would allow the market to be liberalized, the the largest nations continue to drag their feet.

2024 Corporate Aviation Leadership Summit

Kerry Lynch

News and issues relating to international air transport and cargo carriers, national airlines and regional airlines, including aircraft, engines, personnel, acquisitions, accidents, safety, security and training.

News and issues relating to business, corporate and private aviation, primarily regarding turbine-engine-powered airplanes and helicopters. Subjects include aircraft, engines, maintenance, operations, personnel, acquisitions, accidents, safety, security, and training.

Rocheleau served as COO for NBAA

NBAA’s Rocheleau Returns To FAA as Deputy Administrator

Approval paves way for full Senate consideration

Sean Duffy Nomination Easily Clears Senate Commerce Vote

Regs are on halt, ASAC dismantled, and key agency positions vacant

Flurry of White House Actions Reaching into Aviation

Industry hopeful of bonus depreciation renewal but wary of potential tariffs

In Washington, Taxes, Tariffs on Upcoming Agenda

Nehls will examine implementation of FAA bill

Troy Nehls Takes Helm of House Aviation Subcommittee

Hanneke Weitering

News and issues relating to civil and military unmanned aircraft systems (UAS), unmanned aerial vehicles (UAVs) and remotely piloted aircraft systems (RPAS) of all kinds and sizes, including those used for intelligence, surveillance and reconnaissance (ISR), combat (unmanned combat air vehicles, or UCAVs), law enforcement, research and other applications. Of particular focus is the FAA's planned integration of UAS into the U.S. national airspace system.

2016 Singapore Airshow

More In Regulations and Government

NBAA’s Rocheleau Returns To FAA as Deputy Administrator

Rocheleau served as COO for NBAA

Sean Duffy Nomination Easily Clears Senate Commerce Vote

Approval paves way for full Senate consideration

Flurry of White House Actions Reaching into Aviation

Regs are on halt, ASAC dismantled, and key agency positions vacant

In Washington, Taxes, Tariffs on Upcoming Agenda

Industry hopeful of bonus depreciation renewal but wary of potential tariffs

Troy Nehls Takes Helm of House Aviation Subcommittee

Nehls will examine implementation of FAA bill

FCC Proposes Spectrum Rule Changes for Advanced Air Mobility

Proposed U.S. regulatory changes support eVTOL operations and target drone threats

TSA Finalizes Security Updates for Part 380 Operations

NATA is advising FBOs to coordinate with operators on changes

Sean Duffy Receives Bipartisan Support for Top DOT Post

Duffy served in the House from 2011 to 2019 as a Republican representing a district in Wisconsin

AIN Products

SUBSCRIPTIONS

RESOURCES

ABOUT AIN