Ownership And Control, The ASEAN Community Carrier And Cross Border JVs
The establishment and rapid expansion of cross-border JVs have transformed aviation in Southeast Asia over the last 15 years. There are now 11 cross-border JVs operating in six Southeast Asian countries. Several new JVs are planned or are under consideration.
However, it is questionable whether more JVs are needed. The six main ASEAN markets that have JVs are relatively saturated and the remaining four markets are relatively small. The introduction of ASEAN open skies, which has opened up the regional international market to any Southeast Asian airline regardless of domicile, also provides potential expansion opportunities for airline groups in Southeast Asia without having to set new cross-border affiliates.
The cross-border JV model enabled ambitious airline groups to circumvent airline ownership regulations and expand rapidly throughout Southeast Asia prior to open skies. The model remains necessary for accessing new domestic markets since open skies does not permit foreign airlines to operate domestic services. But domestic competition is already intense and at times irrational, since Southeast Asian airlines have historically prioritised strategic expansion and market share over profitability. Meanwhile there have been calls for the creation of an ASEAN community carrier – where ownership and control restrictions are removed, circumventing the requirement that majority ownership and control resides with nationals of that country’s airline. As part of this, ASEAN member states would recognise community carriers designated to operate in each other’s countries. The real kicker would be amending air service agreements with non-ASEAN countries to recognise these airlines.
• Why has the cross-border JV model been so successful in Southeast Asia?
• What are the prospects for more JVs by Southeast Asian airline groups – within the region and outside
• Is Myanmar an attractive market for a potential cross-border JV?
• Can Vietnam support more JVs?
• With the introduction of ASEAN open skies are cross-border JVs still necessary?
• Why haven’t airlines taken advantage of open skies to launch fifth freedom routes?
• How will the latest developments on the EU-ASEAN front, such as the finalisation of the EU-ASEAN air service agreements, affect the aviation community at the global level?
• Will ownership and control and community carrier issues prove an anathema or way forward for the sustainability of ASEAN member carriers?
Moderator: National University of Singapore, Professor of Aviation Law, Alan Tan
Panel:
• AirAsia, Chief Global Affairs Officer, Juergen Keitel
• CAPA – Centre for Aviation, Chief Analyst, Brendan Sobie
• Malindo Airways, Senior General Manager – Legal, HR & Corporate Affairs, Siva Kannan
• Watson Farley & Williams, Partner, Alan Polivnick