Friday, September 22, 2017

EU to start ASEAN aviation talks

The European Commission is planning to start negotiations with the Association of Southeast Asian Nations on an aviation agreement soon, having received a mandate from EU transport ministers earlier this week.

Immigration officers talk beside conveyor belts at Yangon’s new international airport terminal. Photo: Aung Myin Ye Zaw / The Myanmar TimesImmigration officers talk beside conveyor belts at Yangon’s new international airport terminal. Photo: Aung Myin Ye Zaw / The Myanmar Times

The EU is hoping to create new airline routes and new business opportunities for European firms through bilateral agreements with ASEAN and countries like Turkey and Qatar. The moves are part of an EU aviation strategy published in December last year.

Myanmar, meanwhile, is still in the process of adapting to a more liberalised ASEAN aviation sector, which has raised concerns about how the country’s fledgling airline industry will fare against more foreign competition.

An ASEAN-EU agreement would aim to provide more direct flights between the two blocs, and create business opportunities for airlines by reducing restrictions on access to the EU and ASEAN markets. Such an agreement would bring almost 8 billion euros (US$9 billion) in “economic benefits” during the first seven years, according to EU estimates.

The EU already has an open skies system, where any European carrier can operate a flight between any two EU countries, and has been assisting ASEAN’s efforts to create its own single aviation market. The ASEAN Air Transport Integration Project (AATIP) was launched by the EU in 2012 to help ASEAN create common regulations, safety standards and build regional institutions.

An AATIP seminar in Yangon last week was held with the aim of helping Myanmar and its airlines understand the impact of aviation liberalisation, including fifth freedom air traffic rights, and to identify barriers to competition in Myanmar.

Fifth freedom rights allow an airline to fly between two foreign countries as long as the flight originates or ends in its home country. Although the ASEAN Open Skies policy, which came into effect in 2015, allows for fifth freedom rights, they are not well defined.

Alan Tan, a professor at the National University of Singapore Law School specialising in aviation law, believes that Myanmar’s carriers, because of their current size, would not benefit as much as other larger carriers from ASEAN from fifth freedom rights in the region. But there would be net benefits to Myanmar from more tourism and foreign investment, he said.

Officials in Myanmar’s airline industry have expressed concern about competition from other ASEAN carriers, most of which are larger and more established, and often benefit from a more favourable tax regime in their home country.