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Key Asian markets open up

Asian countries are putting aside long-standing political differences and liberalising air services in an effort to help airlines overcome the economic downturn.The Malaysia-Singapore sector has traditionally been a duopoly, controlled by national carriers Singapore Airlines and Malaysia Airlines, but the two countries have now signed a new air services agreement paving the way for others to compete.

Penang and Langkawi in Malaysia are both opened up under the deal. Until now Singapore Airlines and its regional operation SilkAir, together with Malaysia Airlines, have been the only ones permitted to operate from these places to Singapore.

But AirAsia has launched services to these destinations and Jetstar Asia and Tiger Airways are moving into Penang.Tiger will launch Langkawi services in August and Jetstar Asia is expected to follow.

The new liberalised air services agreement also allows new routes to secondary cities in Malaysia, leading some to examineflights from Singapore to Ipoh, Kuantan and Terengganu.

One new route already given the go-ahead is Subang-Singapore, which Malaysia Airlines' ATR operation Firefly plans to serve four-times-daily fromJuly.Subang, formerly Kuala Lumpur's main airport, is closer to the citycentre than Kuala Lumpur International Airport.

The fact Singapore is willing to give Firefly such a competitive advantage shows the extent to which this current economic downturn is prompting countries to look at macro-economic benefits and put aside individual airlines' vested interests.

China and Taiwan form a further example of two sides putting aside their political differences to help the airline sector and their respective economies.

They have just agreed a further liberalisation of their air services agreementwhich allows the introduction of scheduled services for the first time.

The current deal, which itself followed a ground-breaking pact which allowed the launch of non-stop passenger flights last July for the first time in nearly 60 years, gives rights for 108 weekly passenger flights on a charter flight basis. Now the new agreement allows 270 weekly passenger flights, including some scheduled flights. Cargo flights willnearly double to 112 per month. The two sides will also establish a more direct air route between Guangzhou and Taipei and open a new northern air route.

This liberalisation provides a boost to the countries' airlines which are struggling under the weight of recession.

The first quarter of this year saw a string of Chinese carriers post reduced profits; Air China net profit fell 6% to 981 million yuan ($144 million); China Eastern Airlinesfell 81% to 40 million yuan; Hainan Airlines' fell 89% to 32 million yuan and China Southern Airlines' fell 71% to 222 million yuan.Across the Strait, China Airlines posted a net loss of NT$2.96 billion ($90 million) for the first quarter.

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