JAKARTA (TheInsiderStories) – The ASEAN Single Aviation Market (ASEAN SAM), also known as the ‘ASEAN Open Sky Agreement/Policy’, has taken a further step toward becoming a reality since its establishment in 2015.
Ministers for Transportation of ASEAN country members recently concluded several deals, aiming for a unified and single aviation market among ASEAN members in Southeast Asia, Agus Santoso, General Director of Civil Transportation told TheInsiderStories.
According to him, the ministers put together four air deals, including the adoption of an ASEAN Air Traffic Management Master Plan to manage aircraft movement across the region in a more integrated manner, allowing domestic code-sharing rights between points within the territory of any ASEAN member state, something previously limited to international flights (such as Singapore-Jakarta).
Also, eased restrictions on trade in air transport ancillary services within ASEAN; for example, relaxing ownership restrictions for a company from one ASEAN state to set up a firm in another ASEAN country to offer ground-handling services at airports, as well as recognizing licensing requirements for flight crew, including pilots.
‘Basically, we agreed to conduct ASEAN Open Sky in mutual benefit environment. Last year we already ratified and open five Indonesian airports are part of the policy: Soekarno-Hatta International Airport (Tangerang), Kualanamu International Airport (North Sumatra), Juanda International Airport (East Java), Ngurah Rai International Airport (Bali), and Sultan Hasanuddin International Airport (South Sulawesi),’ he explained.
According to him, ASEAN Open Sky vision will ideally entail a single market, like the one in Europe, where air traffic is centrally managed by Euro control an inter-governmental organization with over 40 member states and some 2,000 personnel spread over four European countries.
Airlines fly freely within and beyond the zone, and operate as businesses instead of flag carriers. This allows them to merge between borders, for example, and have better access to funding. Within what is known as the Schengen Area, nationals from 26 European countries (including Germany and Norway) do not need to show their passports when traveling between these countries.
‘We will move into that direction. But first, we have to make sure that our domestic carriers are competitive enough to enter the market. We have to conduct equal treatment because at the moment we have allowed free access for passenger flights to just five cities – Jakarta, Surabaya, Medan, Denpasar and Makassar – as not all ASEAN member states have opened all their airports to competition,’ he added.
While governments are still analyzing potential economic impacts from ASEAN Open Sky (including market access, charters, airline ownership and control, tariffs, commercial activities, competition laws and policy/state aid, consumer protection, airport user charges, dispute resolution and dialogue partner engagement), ASEAN SAM is expected to boost tourism through such open access.
Santoso offered as an example the success story of Manado Airport, where 422 international route flights have landed, with a total of 61,487 tourists, in the first 10 months of 2017, since it was liberalized last year. During the period, Lion Air still leads in serving routes to Manado with 241 flights, followed by Silk Air with 152 flights and Citilink with six flights. Tourists mostly come from Guangzhou (20,768) and Singapore (17,255 arrivals).
Meanwhile, Bambang Adisurya, Executive Chairman of the Indonesian Pilots Association (IPI) sees ASEAN’s single aviation market vision as remaining elusive, because of several challenges.
In reality, it comes down to every country maintaining their own cabotage principle. When it comes to airline ownership, foreigners are not allowed to hold a majority stake. Thus an Indonesia carrier, for example, must be majority-owned by a Indonesian citizen or firm. It is, therefore, noteworthy that ASEAN has now decided to ease some of these restrictions, starting with ancillary services such as ground-handling work.
Apart from flight and equity barriers, there are also air traffic management issues to tackle, in particular for Singapore: in recent decades there has been a limit on flights from Indonesia to Singapore. Since 1946, Singapore has overseen parts of Indonesian air space in Riau, including the resort islands of Batam and Bintan.
The responsibility was handed to Indonesia by the United Nations’ International Civil Aviation Organisation (ICAO), which regulates global commercial aviation.
Other issues include the highly-fragmented diversity of the region, with countries and their airlines at different stages of development; execution will be challenging. Unless this and other issues are sorted out, ASEAN Open Sky may just stall and crash.
‘The most important thing is equality engagement. If we open 5 routes, for example, then the counterpart country should also open 5 routes. Same with tariffs: if a domestic carrier is pledged to abide by ceiling and floor prices, how about international carriers? So we should have the same level playing field and quality as well as performance,’ he said.
In addition, if regulations do not apply equally, ASEAN Open Sky will only benefit certain countries and could potentially cut into Indonesia’s big market.
Written by Yosi Winosa, email: firstname.lastname@example.org