Bimp-Eaga aviation plans take wings

It makes so much more sense now that the East Asean Growth Area (Bimp-Eaga) has opted to adjust its aviation liberalisation scheme and hitch it on the bigger open-skies plans of the Association of Southeast Asian Nations (Asean). It shows the Eaga transport ministers' wisdom in planning for the sub-region without losing sight of the big picture.

Transport cooperation plays a major role in realising the objectives of the sub-region because connectivity is one of the critical factors that will unlock the economic potential of the provinces, cities and states covered by Eaga which groups Brunei Darussalam, Indonesia, Malaysia and the Philippines. Connectivity is critical because it opens avenues through which producers can access markets within the economic growth area preferably at cheaper costs. It also boosts the tourism sectors in the sub-region.

Eaga already has its own open-skies plan, with the so-called fifth freedom traffic rights that allows an airline from a member-country to fly between destinations in two other member-countries. It does not, however, make it immediately attractive because the markets covered are much smaller than the combined market size of all of Southeast Asia.

While there are areas of economic cooperation where it is strategic for Eaga members to plan among themselves, there are those where region-wide collaboration works much better. And open skies is one of them.

Liberalising aviation remains a challenge though because many governments in the region have stakes in flag carriers and many of these airlines continue to require protectionist measures from their governments in order to strengthen their bottom lines.

There have been recent developments, however, that point to the willingness of governments to at least minimise the protection accorded to national airlines. This is in recognition of the growth of low cost airlines which have provided a stronger argument for governments to open up their aviation sectors and allow flag carriers to compete with no-frills airlines in a level playing field.

The ability of low cost airlines to operate in the region makes them contribute to the growth of the tourism sector, and this is growth that is valued as it generates more business and jobs. In 2005, low-cost carrier passengers in Asia numbered 20 million, accounting for 12 per cent of the market, according to figures from the World Tourism Organisation. A report by the Centre for Asia Pacific Aviation showed that Asia Pacific low-cost carriers had accounted for 15.7 per cent of total seats in the region last year, "or just under one in six seats". That was a staggering figure coming from only 1.1 in 2001.

Earlier this year, Asean Transport Ministers said they were keen on policy changes that will encourage national airlines to compete head on with low cost airlines. It's a development that augurs well for the regional economy. It is also critical for Eaga members to come up with strategies to boost connectivity within the sub-region to help provinces, cities and states that have yet to maximize economic growth emanating from national capitals. Freedom in the skies, however, will benefit immensely all peoples of the region with the synchronisation of Eaga's aviation plan with that of the Asean.