Singapore to reap benefits of ASEAN Open Skies agreement: Analysts
But analysts also say there are kinks to be ironed out before the skies are truly open.
- Posted 19 Feb 2016 21:00
- Updated 19 Feb 2016 23:02
SINGAPORE: As ASEAN pushes towards deeper economic integration, greater connectivity is important, especially so in communications and transport. Having the ASEAN Open Skies agreement is important to help facilitate growth as well.
Analysts Channel NewsAsia spoke to have said Singapore is poised to leverage the benefits of a liberalised ASEAN market, but they also noted that there are kinks to be ironed out before the skies are truly open.
ASEAN SINGLE AVIATION MARKET TO BOOST TRADE
With the launch of the ASEAN Economic Community, Southeast Asia looks poised to tap the economic benefits of a regional grouping. This is being supported by an Open Skies agreement, allowing carriers from all 10 member nations to fly freely within the region.
An ASEAN Single Aviation Market (ASEAN-SAM) will help increase trade between the nations by boosting the flow of goods and services and easing restrictions. It will also boost travel around the region.
"We think Open Skies is very important for the aviation community and the region. We have seen across the globe that when we have an Open Skies policy, it just encourages traffic. So the more competition we have, the more traffic, the better (the) services and fares offered to the passengers, (which) makes it a very good proposition for the flying public and ultimately for economies across the region,” said Mr Steve Lien, president of Honeywell Aerospace, Asia-Pacific.
But a more liberalised market comes with its own set of challenges. With security a main concern, one key task lies in adopting a homogeneous level of security standards and checks across ASEAN.
Infrastructure support is another challenge - not just on the ground but also in the skies.
"So the downside is if the infrastructure isn't ready for it yet, it can be a problem. The infrastructure in aviation is really two things. One is the ground infrastructure; its runways, its airports. The second is the airside infrastructure, which means air traffic and how the air traffic is controlled by the relevant authorities,” said Mr Lien.
AIRLINES NEED TO BE READY FOR EXPANSION
The airlines themselves also need to be ready.
In the past decade, there has been an explosion of low-cost carriers in the region. But they have been struggling of late and may not be ready for any spurt in expansion.
Meanwhile, full service airlines, which have been facing increasing competition from budget airlines, may face a tighter squeeze when other national carriers are allowed to compete on their home turfs.
The prospect of increased flight frequency may not necessarily translate to more revenues.
"It is all about capacity management. So there is no point having a frequency of flights with empty seats. You've got that balance of frequency with load factors. Load factors are going to be key for any efficient operation,” said Mr Colin Mahoney, Rockwell Collins’ senior vice president of international services and solutions.
With a liberal aviation policy, Singapore has already concluded air services agreements with more than 130 countries and territories, including 60 Open Skies agreements.
The Civil Aviation Authority of Singapore noted that Open Skies for the ASEAN market would support both trade and tourism.
The number of tourists coming into ASEAN is projected to hit 145 million by 2023. With Singapore expecting on average between 14 million and 16 million tourists yearly, national carrier Singapore Airlines said the new liberalised market will play a key role in boosting tourism for Singapore and the region.