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Trade officials call for ASEAN ‘Open Sky’ implementation in 2015

Trade officials are pushing for the implementation of the ASEAN “Open Sky” initiative by next year to address connectivity issue in a geographically fragmented region as the 10-member countries grapple with increased travel under a single market economy and the need for more airport and seaport infrastructure facilities.

Trade and Industry Secretary Gregory L. Domingo said at the session on “Connect on Trade Lifting Barriers to Growth” at the World Economic Forum held here that liberalization of services in ASEAN is now being tackled by leaders after the region has successfully reduced tariffs on trade in goods.

This means the region now has to work on removing non-tariff barriers to trade and one of the critical sector is on the services sector. Domingo said that Asean is working towards removing the bulk of work done by Asean on trade in services and of the 10 major packages it has already completed work on 8 and is working on the liberalization on the services.

The focus in the services area is to allow investments in areas that put a ceiling on equity stake. The remaining trade in services sectors that Asean is working on are on air services, insurance, and banking liberalization.

On the proposed Open Sky, the region aims  to promote competition in the airline industry, and  to give all airlines from ASEAN the scope to compete on intra ASEAN routes. Open Sky will also give airlines extra flexibility over their route development.

There are many Open Skies bilateral agreements, and a few regional agreements. Few regional Open Skies agreements have led to substantial liberalization or integration. The exception is Europe – Open Skies in Europe has meant the formation of a single aviation market.

ASEAN has  a wide range of types of bilateral agreements in place and a range of government policy stances. Some bilateral agreements are very liberal, though others are restrictive, limiting the number of airlines which can compete, and the amount of capacity they can offer.

Many countries are now allowing additional gateways, but the impact of this is lessened in some cases because overall capacity is still limited.

There are also different policies in each of the ASEAN countries wherein some are liberal and others with limitations. This has something to do with the scale of the aviation sector in each member state.

In the case of the Philippines, Domingo said the government position is to open all airports in the country to foreign carriers except Metro Manila, which international airport is already operating beyond capacity.

This has put the Philippines in a reverse position with other ASEAN countries, which have enough capacity for their premier international airports but not with its provincial airports.

Singapore Senior Finance Minister Josephine Teo for her part stressed that to ensure equitable development in the region member countries must address connectivity, which she said is central to the realization of the Asean Economic Community.

Teo said that the most important aspect of the masterplan for Asean connectivity is air as 70 percent of the region’s connectivity concerns have all been achieved saying these are the low hanging fruits.

Teo has pressed the issue of air connectivity stressing that by 2030 half of the Asean population should have reached the middle class level and can already afford for air travel.

This means, she said, multiple increases in air links and the need to satisfy the demand of the public. According to Teo, the main challenge is capacity among airports as she stressed the need for increased investments in airport infrastructure.

Asean has also the opportunity to forge open sky with its partners regional trading partners like China and India. An air services agreement may also be forged with EU.

Cambodia Minister of Commerce Mustapa Mohammed for his part said that the issue of connectivity goes beyond the physical aspect but more of institution connectivity. He said that unless the Asean single window is fully implemented the air link connectivity will not work.

“Hardware is on one side but software should be there to implement this connectivity initiative,” he said.