Flight freedom good for competition
OPEN SKY POLICY IS NEEDED TO SUPPORT THE REGION’S COMMITMENT TO ESTABLISH THE ASEAN ECONOMIC COMMUNITY
Even though the protocols of the ASEAN Open Sky Policy have not been fully implemented in Indonesia, the government has prepared various sectors, including safety standards and the country’s aviation infrastructure, to support the single market in aviation.
The Transportation Ministry’s director general for air transportation, Suprasetyo, said the flight liberalization would result in a more efficient aviation industry, which would not only benefit air carriers but also passengers.
“So these airlines from various countries can just get in without any barrier. It’s good for competition because the services will stagnate without the competition,” he said recently.
The discussion on the establishment of the ASEAN Open Sky Policy was initiated when the heads of the 10 member countries held a summit in Bali in 2003, during which they signed the Bali Concord II declaration.
The establishment of the Open Sky Policy is needed to support the region’s commitment to establish the ASEAN Economic Community (AEC), which was inaugurated late last year. The free trade agreement, also called the ASEAN Single Market, will gradually allow free flows of goods, services and people within the region.
ASEAN countries agreed to unite their skies into a single aviation market to boost the region’s economic growth. It is also expected to boost flight frequency in the region, enhance connectivity between the region’s aviation markets and encourage higher service quality, as well as cheaper ticket prices for passengers.
The Open Sky Policy is a relatively modest liberalization agreement, compared to, for example, those in the EU. ASEAN members agreed to grant only third, fourth and fifth freedoms among member states. The agreement is implemented through three multilateral agreements: the ASEAN Multilateral Agreement on Air Services (MAAS), the ASEAN Multilateral Agreement on the Full Liberalization of Air Freight Services (MAFLAFS) and the ASEAN Multilateral Agreement on the Full Liberalization of Passenger Air Service (MAFLPAS).
The third freedom is the right to carry passengers or cargo from the home country of the carrier to a foreign country — for example, from Jakarta (home) to Singapore (foreign). The fourth freedom is the right to carry passengers or cargo from a foreign country to the home country of the carrier — for example, from Jakarta (foreign) to Singapore (home). Meanwhile, the fifth freedom is the right to put down in and to take off from the territory of the first country, with the passengers or cargo coming from or destined for another country other than the home country of the carrier — for example, from Jakarta (home) to Singapore (foreign) and then to Kuala Lumpur (foreign).
Several ASEAN members such as Indonesia, the Philippines and Laos delayed their ratification of the Open Sky Policy amid fears that their airlines, which are still relatively less competitive than those in Singapore and Malaysia, would lose their markets to their regional peers. Indonesia only ratified the agreement early this year and is opening up five designated ports in five cities, namely Jakarta; Denpasar, Bali; Surabaya, East Java; Medan, North Sumatra; and Makassar, South Sulawesi.
DBS Bank research cited that Indonesia’s unique geography, growing middle-class population and aggressive expansion plans by both home-grown and ASEAN carriers
meant that Indonesia’s aviation market was poised to dominate the aviation space.
“With this, we expect to improve the professional human resources in the aviation industry, the airlines, and we will also extend the operational hours of the airports so we can boost the utilization of the airports,” Suprasetyo added.
Aviation infrastructure remains one of the challenges of the Open Sky Policy for the archipelagic country. The country currently has 235 airports, mostly operated by the ministry, while the big ones are operated by state airport operators PT Angkasa Pura I and PT Angkasa Pura II. The Transportation Ministry also aims to build 62 new airports over the next five years.
“Last year, we improved 100 new airports in the country, from the north to Papua,” the director general said.
Overcrowding at Indonesia’s major airports has impeded the implementation of the Open Sky Policy. Soekarno-Hatta International Airport in Banten, widely cited as the only airport that has currently been able to fully implemented the policy, was already 246.8 percent over its 22-millionpassenger annual capacity by serving at least 54.2 million passengers a year by 2015.
Currently, Soekarno Hatta is also gearing up to have its new Terminal 3 Ultimate start operating by May this year. It is expected to further increase its capacity.
The ministry also claimed to have begun improving the safety, security and services of the airports, including the on-time performance (OTP). Suprasetyo said that the ministry had reduced the commercial areas to give more space to the public, as well as revitalized the airports.
“We have watched over the on-time performance of the airlines and we publish the rankings almost monthly. We have also set up regulations for managing the delays,” he said.
In terms of safety and security, Suprasetyo said the country had also aimed to upgrade the aviation safety level based on the Universal Safety Oversight Audit Program (USOAP) by the International Civil Aviation Organization (ICAO), which rose from 45.33 percent of 1,060 protocol items to 70 percent this year.
The security level itself has reached 93.6 percent, he said. The ICAO is slated to conduct the offsite audit in April.
Meanwhile, the country has also aimed to upgrade the safety status given it by US Federal Aviation Administration (FAA) by this year, from Category 2 to Category 1. The government claims to have fulfilled 97.5 percent of the items in the audit, with seven items remaining.
“We will equip the airlines with these regulations,” he said, adding that the ministry had also issued at least 100 regulations last year in its bid to improve the sector.
The government also scrapped the import duty for aircraft parts and maintenance as part of the economic stimulus package last year, aimed to reduce the operational costs of the airlines.
“Our airlines are big enough now. I think it’s the other countries that are still worried about us,” he said.
However, Suprasetyo said the government would not protect the local airlines and would let them compete healthily with the other airlines in the region.
New routes: An Airbus 230 aircraft owned by Garuda Indonesia’s subsidiary Citilink departs from Husein Sastranegara Airport in Bandung on its way to Lombok, West Nusa Tenggara. The airline plans to open three new routes this year connecting Jakarta-MedanBanda Aceh, Medan-Pekanbaru and Pekanbaru-Bandung.