Asean Transport Ministers called for the signing of a new Asean Multilateral Agreement on the Full Liberalisation of Passenger Services in 2010, to expand the scope of the existing Asean Multilateral Agreement on Air Services to include destinations not currently listed (The Star Online, 23-Dec-2009). Meanwhile, Malaysia's Transport Ministry stated the country has benefited from the Asean liberalisation, as it has increased business activity (The Star Online, 23-Dec-2009). The country recently signed a new bilateral air services agreement with Singapore, providing access to 18 points in Malaysia, including Alor Setar, Bintulu, Ipoh, Kerteh, Kota Baru, Kota Kinabalu, Kuala Terengganu, Kuantan, Kuching, Labuan, Langkawi, Malacca, Miri, Penang, Sandakan, Sibu, Subang and Tawau.
Asean Transport Ministers called for signing of Asean Multilateral Agreement
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Linking Asia with North America has been the market cornerstone for Korean Air and Cathay Pacific while producing a growth market for relatively new entrants like ANA and EVA Air. Yet, while northeast Asian airlines have the geography for profitable nonstop North America flying, southeast Asian airlines are challenged in serving the route.
Singapore Airlines feels the need for a significant North American presence to diversify its network and offset pressure from Gulf airlines, which have profoundly weakened SIA in its core Asia-Europe and Australia-Europe markets. Although Singapore Airlines plans to resume nonstop North American flights, these are token services for strategic purposes.
The primary objective has to be securing more fifth freedom rights for one-stop service. Singapore is encouraging the ASEAN bloc to secure open skies with Japan, Korea and the EU since open skies will entail unlimited fifth freedom rights. Korea is unlikely to agree, with Japan hesitant. Fifth freedom liberalisation is a contentious item in the otherwise benign EU-ASEAN negotiations. Countries worry that granting unlimited fifths opens Pandora's box to growth – not just from SIA, but any number of airlines that are quiescent today but could aspire to be powerhouses in the future.
Brexit and aviation Part 3: Importance of Asian models and liberalisation moves will be accelerated
New cross-border operating alternatives in the international arena are emerging, as times change and the global balance of power shifts towards Asian markets. One option to preserve trans-border networks for airlines is to replicate the prolific Asian LCC JV networks that allow multiple licences in individual jurisdictions while maintaining a common brand. This is no easy solution, is not guaranteed and introduces challenges.
But, as the major EU LCCs review their options in the new environment, there is little doubt that the biggest losers if the UK were excluded from the single aviation market would not be the UK or the EU; those who suffer most will be Europe's consumers and regional economies.
The prospects for a continuation of the single market are good, yet the world is changing fast as Asia's airlines and investors and their governments increasingly gain a voice in shaping the future. For every step backwards that Europe - previously a leader in liberalisation - takes, so the Asian aviation influence accelerates. Mostly this is progressing in a more liberal direction, where Europe's likely course now is regressive.