How ASEAN’s open skies works

BANGKOK ASEAN’s moves to open its skies is underway well ahead of moves to introduce a free-trade era known as the ASEAN Economic Community due to kick in at the end of this year.
But there is confusion in the market and more than a fair share of worries that open skies will be a threat to smaller airlines.
Tagged the ASEAN Single Aviation Market (ASEAN-SAM) it came into effect 1 January, to increase regional and domestic connectivity.
Officially it is supposed to integrate production networks and enhance regional trade by allowing airlines from ASEAN member states to fly freely throughout the region.
inside no 6It involves liberalisation of air services under a single, unified air transport market.
Airline industry analysts are largely positive on the new policy as it will lead to growth as it opens up the market to more competition.
Greater connectivity between aviation markets arising from ASEAN-SAM should encourage higher traffic growth and service quality, while lowering ticket prices.
It will certainly boost tourism that relies entirely on convenient and affordable airline services to survive. Overland tourism is in its infancy and often considerably more risky than flying.
If ASEAN-SAM is successfully implemented as planned there will be no regulatory limits on the frequency or capacity of flights between international airports across the 10 ASEAN member countries.
The policy does not address airline ownership. There is no provision for regional ownership, or common majority shares in airlines held by a single ASEAN-based investor. Common ownership of airlines across borders would be a major problem for ASEAN aviation as it is currently dominated by government-owned airlines.
In the long-term the agreement guarantees third, fourth, fifth, and seventh freedoms of the air. This is a ticklish issue that has not been resolved. For example Indonesia, by far the largest aviation market in ASEAN, has not signed off parts of the agreement that go beyond point-to-point services between commercially important cities or capitals.
inside no 6.1Air freedoms:
Third and fourth freedom rights: The right to fly from an airline’s home country to a foreign country, and vice versa.
Fifth freedom rights: The right to fly beyond the second country to a third country with the right to sell tickets in the second country.
Seventh freedom rights: The right to fly between two foreign countries while not offering flights to an airline’s home country.
Third and fourth freedoms are the core features of the open skies agreement in ASEAN agreed upon by all countries in the group.
However, the open skies policy will ultimately allow fifth freedom rights that allows an airline to fly to a third country with full commercial rights.
Seventh freedom rights are way down the must-do list in the agreement and unlikely to be approved for some time to come.
There are delays in implementing fifth freedom rights. For example technically a Bangkok-based airline could file for a new service such as Bangkok-Luang Prabang-Bali and under fifth freedom rights it would have the right to sell tickets for each sector and compete on the Luang Prabang-Bali sector openly with Laos-based airlines.
This possibility concerns some ASEAN member countries such as Indonesia and this has led to a postponement in signing off the fifth freedom clause.
Currently, ASEAN SAM is limited to flights between commercially important or capital cities. There is also a cap on slots given to airlines. It will be opened up to include secondary cities soon.
(Sources:ttrweekly.com