Liberalisation takes hold in Southeast Asia

Singapore
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Positive signs are emerging that air services liberalisation initiatives in Southeast Asia are more than just empty promises, with Indonesia and Singapore reaching a new air services pact that removes protectionist policies barring low-cost airlines from key routes.

Indonesia had for several years maintained controversial restrictions on low-cost airlines from Singapore serving four destinations, namely Denpasar (Bali), Jakarta, Medan and Surabaya. It readily admitted that the restrictions were designed to protect flag carrier Garuda Indonesia from new competition.

The removal of these restrictions was seen by many as a test case for Southeast Asian nations' promises to liberalise air services policies, and Indonesia has now come through with a new agreement with Singapore.

Low-cost airlines are now allowed to operate between the two countries. Singapore-based Tiger is to serve Jakarta as a result, while Indonesia AirAsia is to serve Singapore from Bali, Bandung, Jakarta and Yogyakarta.

Low-cost airlines from Singapore will be classified as "boutique" airlines for the Singapore-Jakarta route, meaning they will have to have a slightly different service than for their other flights. Tiger says this includes offering complimentary refreshments as well as hot meals for purchase, which is something it currently only offers for purchase on longer sectors. In reality, however, the restrictions will have little impact on Tiger's operations.

In November, the 10 countries that make up the Association of Southeast Asian Nations (ASEAN) firmed up a long-planned air services liberalisation programme that they said could lead to a full Open Skies regime for the region by 2015.

Under the agreement, a full liberalisation of air freight services has taken effect, along with a full liberalisation of third and fourth freedom rights for passenger services between capital cities.

The initiatives, which still require ratification from individual member nations, also called for member nations to allow fifth freedom or beyond services through capital cities by 2010.

For more on the ASEAN nations pledge to liberalise air services see this recent story at: flightglobal.com/aseanskies