A single aviation market for the Association of Southeast Asian Nations (Asean), also known as the Asean Open Skies project which will be implemented alongside the Asean integrated economy in 2015, will boost the region’s air transport industry and eventually enhance each country’s tourism sector, a US-based think tank said.
According to IHS Economics, the Asean Open Skies agreement will be a major catalyst for long-term growth in the Southeast Asian commercial aviation and tourism industries with the potential to contribute significantly to economic growth among Asean nations over the next 10 years.
During the two-day World Economic Forum on East Asia which concluded on Friday, Asia Pacific chief economist for IHS Economics Rajiv Biswas said Asean airlines are poised for rapid expansion over the next two decades, taking delivery of an estimated 3,000 new commercial aircraft by 2032.
Biswas explained that the creation of the Asean Single Aviation Market (ASAM) is one of the important pillars for the establishment of the Asean Economic Community in 2015.
“Asean has recognized the importance of air transport for the economic development of Southeast Asia, and has designated this sector as one of the 12 priority sectors for the establishment of the Asean Economic Community,” Biswas said.
To date, the 10 member countries of Asean—Malaysia, Indonesia, Thailand, Singapore, Philippines, Lao, Vietnam, Myanmar, Cambodia, and Brunei—have already concluded several multilateral agreements that serve as building blocks for the creation of a single commercial aviation market from 2015.
Biswas believes that an open skies policy for Asean carriers will help increase competition on major routes between international airports, helping to constrain air fares for consumers and boost air passenger traffic within Asean.
“The increased competition combines with increased ownership limits for shareholders will also support further consolidation in the airline industry,” Biswas said.
This view is shared by the Civil Aeronautics Board (CAB) of the Philippines. ”While the agreement poses competitive challenges on airlines, it also opens up opportunities for them,” CAB executive director Carmelo Arcilla told The Manila Times.
Moving forward, Biswas emphasized that Asean governments will have to pursue major infrastructure development programs to support the development of new airports and modernization of existing airports to sustain the rapid growth of the aviation industry and tourism visits to Asean.
Speaking for Philippine aviation, Arcilla admitted the country is not yet ready for an Asean air transport integration.
“The remaining protocols have been signed [regarding the open skies agreement]but still pending ratification by the Philippines. Full ratification of the protocols would be a major step towards Asean air transport integration,” he said.
Once all the processes are completed, Arcilla believes the agreement will have overall economic benefits for Asean members, especially the Philippines.