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Byline: Tim Vutha

As ASEAN i nt egr ati on i s approaching to open free flow of goods, services, investment, capital, and skilled labour, another effort is on track to liberalize the regional skies" i.e. the single sky policy' for planes registered in the region to fly freely across the region.

ASEAN has set its major aviation policy so-called ASEAN Single Aviation Market (ASEAN-SAM) to develop a unified and single aviation market in Southeast Asia by 2015, allowing air carriers registered in any of the ASEAN countries to fly freely without limitation within the region of 600 million residents.

The bloc will directly benefit from the growth in air travel around the world, and also freeing up tourism, trade, investment, and service flows between member states.

But these regional integrated skies won't be fully achieved in the immediate future or by the end this year as there are many complicated things to deal with among members' aviation barriers, aviation experts confirmed at the ASAM talked hosted in Bangkok, Thailand in mid-March this year.

ASEAN-SAM was proposed by the ASEAN Air Transport Working Group, supported by the ASEAN Senior Transport Officials Meeting, and endorsed by ASEAN Transport Ministers. The program has been hugely funded by the European Commission under its regional project called the ASEAN Air Transport Integration Project (AATIP). Because of that, the EU's single skies have been applied as the sample for ASEAN to adapt.

ASEAN air freedom principles

ASAM comprises of seven air freedom airlines traveling across the region. The most important aspect of liberalizing aviation markets is the guarantee of third, fourth, fifth and seventh freedoms flights.

Third and fourth freedom rights which are the core features of the open skies agreement in ASEAN agreed in 2008 by all countries are the right to fly from an airline's home country to a foreign country, and vice versa, without government approval.

Fifth freedom rights which was discussed and agreed by most member states in this March's aviation talk is the right to fly beyond the second country to a third country with the right to sell tickets in the second country. Seventh freedom rights, i.e. the right to fly between two foreign countries while not offering flights to an airline's home country is still in the negotiation process and is likely to take a longer time to achieve.

However, the re wo n 't be a f u ll implementation of fifth freedom rights yet. Although open skies will exist for capital cities, there will be a cap on slots given to airlines. In addition, there are restrictions for certain host countries which do not exist in other international open air agreements, they said.

Wolfgang Sander-Fischer, AATIP's air tra nspo rt e xpe rt told Cambo d ia n Business Review Magazine that so far, only seven out of 10 member states have ratified the agreements especially on the fifth rights.

The 5th freedom traffic rights will allow air carriers to enhance market access, i.e. improve connectivity among ASEAN member states, increase competition and give consumers more direct connections, choice and lower fares.

However, harmonized aviation safety and economic policies and regulations such as f a ir co mpe titio n, co nsu me r a nd environmental protection, among others still need to be adopted by the 10 member states," he said.

As of now, nine of the 10 ASEAN member countries are partially or fully implementing an open skies agreement in 2015. The Philippines has still not ratified the open skies agreement, while Indonesia has also not signed the full agreement but is allowing airlines from ASEAN countries to make unlimited flights to Jakarta Soekarno-Hatta International Airport.

Fischer, who has been working in civil aviation for over 40 years, advised more ha rmo nize d re gio nal po licie s and regulations will be required to establish a true single aviation market. Likely, also new, or much strengthened, ASEAN-wide organizations will be required in order to monitor and safeguard such policies and regulations as well as make ASAM as efficient and effective as possible."

Airline industry analysts are very positive on the new policy and many said that the single aviation market will lead to growth and development as it opens up the market to more competition. Greater connectivity between aviation markets arising from ASEAN-SAM should encourage higher traffic growth and service quality, while lowering ticket prices.

If ASEAN-SAM is successfully implemented, there will be no regulatory limits on the frequency or capacity of flights between international airports across the 10 ASEAN member countries. Tellingly, not included in the current agreement are steps towards opening up ASEAN aviation to common ownership, in a market still very much populated by state-owned airlines.

Tran Dong Phuong, ASEAN's Director of Finance, Industry and Infrastructure said at the ASAM conference that the achievement of the fifth freedom agreement this year is a big milestone the group has attained, hoping the regional open skies policy will be completed by the end of this year.

He, however, admits that the ASAM roadmap will face challenges on the way, particularly in the areas of marketing implementation and infrastructure such as airpo rts, f u rthe r su pport f ro m technical components like safety and security, air traffic management, and human resource.

For expanding markets out of ASEAN, he reported that while the Chinese government has already granted ASEAN airlines the fifth freedom' to reach its 28 cities including big cities like Beijing, Shanghai and Guangzhou, ASEAN is also negotiating with EU, South Korea and India for similar agreement as well.

ASEAN airlines experienced double-digit capacity growth in the four years to 2013. The share of budget airlines in the region surged from 13.2% in 2003 to 57% in 2014. Demand for seats also jumped from 2 million to 50 million. The region drew 100 million international tourists in 2014, while intra-regional travel reached nearly 50 million arrivals, Phuong reported.

Alan Tan, Professor of Aviation Law at National University of Singapore told Singapore-based, Straits Times that other milestones need to be achieved if ASEAN is to truly exist as a single aviation market. These include removing restrictions that prevent a carrier from setting up a wholly owned subsidiary in a different ASEAN country and allowing an airline from one country to operate domestic flights in another.

In sum, the prospect for a truly single aviation market in ASEAN remains elusive. And yet, when pitted against larger, unified markets, the ten small economies of ASEAN have little choice but to continue forging a closer common market and true open skies'," he said.

Jonathan Astill, Director of International Affairs for National Air Traffic Services (NATS), a UK' leading air navigation service provider compares the EU and ASEAN aviation environment as surprisingly similar, especially its similar population amount of 500 million for EU and about 600 million for ASEAN, while both are creating respective single aviation markets.

Forecasts indicate the ASEAN region is about to experience an explosion in air travel comparable to that experienced in Europe during the nineties and early 2000s (440% increase in routes within the EU between 1992 and 2013) but over a much shorter timeframe.

By 2030 the Asia Pacific region is estimated to have a 38% share of the global aviation market. To service that forecast increase there are more than 3,000 aircraft on order with a combined cost of $500 billion, he reported, The Europeans have some past experience in this kind of growth and we are well positioned to assist our ASEAN colleagues."

The two communities, last year, also outlined plans to boost bilateral air traffic via a joint policy to establish the ASEAN- EU aviation networking.

ASEAN along with EU and the public and private groups related to aviation industry have been discussing with each other since 2004 to harmonize the region's open skies with over 30 meetings until now. Progresses have been achieved gradually ever since.

The ASAM conference chaired by Thailand gathered over 100 aviation experts from ASEAN, EU, European Aviation Safety Agency (EASA), EU member states and civil aviation industry.

Some key elements that resulted from the conference are; the ASEAN aviation sector is already lacking resources. If no regional mechanisms are put in place, ASAM will exert an additional extreme pressure on the aviation workforce in the region.

This may challenge the capacity of the ATM system to cope with the traffic growth, put even greater challenges on the aviation safety and this may prevent the positive benefits of the single aviation market to materialize, according to the conference report released by AATIP team in mid-April. The report also stressed the liberalization and harmonization processes should happen in parallel but liberalization should be rather considered as a driver for harmonization. They also realized that the implementation of a single aviation market requires the making of a regional regulatory system which does not necessarily supersede national regulatory systems.

All ASEAN stakeholders, including the industry, should play a more pro--active role in the design and implementation phases. Mutual recognition of certificates, licenses and approvals is essential to support the development of this effort, it concluded.

What ASAM means for Cambodia

ASAM will be the opportunities for Cambodia, rather than a threat, Sin Ch anser eyv uth a, sp okesm an for Cambodia's State Secretariat for Civil Aviation (SSCA) who also attended the ASAM conference told Cambodian Business Review Magazine.

The integration of Cambodia's aviation industry into the region is profitable because we can expand our market, increase competition that will benefit customers and the nation's long-term economic growth in the long run, he said.

After the regional aviation law is completed, it will mean that airlines registered in any ASEAN country will be recognized by all member countries, he exemplified, So, in the future we don't have to spend time and effort to inspect those foreign airlines that want to land on Cambodia's airports, because countries in ASEAN will practice the same registration standards that we can trust."

Because there are plane crash incidents in Malaysia while Thai aviation security has been criticized over insecurity recently, Cambodia's aviation authority says it has no plans to ban Thai air carriers to enter Cambodian airports for now.

However, Cambodia will take a softer approach" by making sure that Thai Airlines comply with all SSCA regulations and requirement," he stressed.

SSCA has also strengthened efforts to ensure national aviation security, he added. Those efforts are; enhancing control on licensing new local and international airlines, train more local human resource on aviation-related skills, and strengthen aviation-related regulations and laws, while the nation already has Civil Aviation Law.

So far Cam bodia contains th ree international airports, nine local airports. The nation has registered five local airlines so far including; Cambodia Angkor Air, Apsara Air, Bassaka Air, Bayon Airline, and Sky Angkor Airline. Cambodia also approved over 30 inbound airlines to fly across its sky.

The numbers of passengers are gradually increasing as the country plans to mobilize at least 7.8 million passengers by 2020 as forecasted by the International Air Transport Association (IATA), there are plans and progressive developments to develop air infrastructure.

The French-backed airport operator Cambodia Airports that has developed and operate the current three international airports in Cambodia, i.e. Phnom Penh Int'l Airport (PPIA), Siem Reap Int'l Airport (SRIA), and Sihanoukville Int'l Airport (SIA), launched in 2011 for Siem Reap airport and Phnom Penh airport the upgrading programs to double their capacities to cater for five million passengers each by early 2016.

According to Cambodia Airports, as soon as some of the developments that are being undertaken are already completed and the facilities will soon be commissioned, the network of international airports can ultimately accommodate at least 24 million passengers. They also highlighted that air traffic may experience softer increase (one single digit growth) as other transportation means improve and the roads infrastructure expands.

The number of passengers going through Cambodia's international airports totaled 5.7 million in 2014. Phnom Penh and Siem Reap international airports provide nearly 500 regular flights per week or about 60 flights per day, connecting both cities to 30 destinations in Asia, Europe and the gulf region. Their maximum passenger handling capacities are 8 million and 6 million respectively, while Sihanoukville ai r p or t can h old 10 m i lli on for Sihanoukville.

On the new international airport plans, two more airport construction projects have been announced to help reduce growing load from the country's existing three international airports.

Based in Siem Reap, the 4th international airport was announced a few years ago to build on a 500-hectar land about 60km from the Siem Reap's provincial town. The airport will be managed by NSRIA Co, Ltd worth $1 billion and co-owned by two South Korean companies. The project's concession will span 65 years covering five years of construction and 60 years of operation after which it can be extended.

Prime Minister Hun Sen announced a few years ago to build the nation's fifth international airport which will be the largest in the country that can accommodate about 10 million passengers per year. It was speculated to be built somewhere in Kompong Chhnang province.

Responding to the news that there is a plan to relocate the current Siem Reap International Airport which is located just 3km from the UNESCO's heritage site, Angkor zone to a distant location to protect the temple buildings, SSCA's Sin Chansereyvutha said it is just the rumor as the government doesn't have such a plan yet as a vibration studies concluded that was no impact of the traffic on the temples.

He also clarified that the plan to build the nation's biggest airport in Kompong Chnang as still far off as it is just the government's long-term vision that will take a much longer time.

He also reported that the new SSCA office will be finished by the end this year, while the kingdom's aviation training center will be finished in late 2016.

Besides relying on international airports, the other nine local airports run by SSCA have also been serving local flights vigorously. SSCA has also made efforts to re-activate some local airports to handle the domestic connections as it had already submitted a plan to the government for four local airport projects few years ago, including airport constructions in Preah Vihear and Kratie provinces and the airport renovations in Ratanakiri and Battambang provinces.

Cambodia Airports has been carrying out an airport integration master plan with the IATA to explore where and when some provincial airports should be re-opened in the future.

Returning to regional open skies, some of the bloc's bigger economies are developing their aviation infrastructure to welcome the opportunity after the integrated skies opens. Singapore is building Changi Airport's Terminal 4 that will be ready in 2017. Plans are also underway for Terminal 5 which will be completed by 2025. By then, Singapore will be able to handle over 136 million passengers a year.

While Malaysia focuses on low cost carriers, Indonesia's top airlines are determined not to be left out as its flag-ship air fleet Garuda has just placed an order for 50 single-aisle planes worth $4.9 billion. By the end of this year, Lion Air and Garuda of Indonesia will surpass Singapore Airlines as the region's biggest carriers by fleet size.

Bangkok's Suvanabhumi airport is operating at 90% of its capacity and a new terminal will be completed in 2017, however, Low Cost-Carriers airport Don Maung will see greater passenger throughout.
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Publication:Cambodian Business Review
Geographic Code:9CAMB
Date:Jun 30, 2015
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