AirAsia to Open Kalibo-Kuala Lumpur this April


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MANILA, Philippines—Malaysian tourists will soon be closer to savoring the world renowned white sands of Boracay with AirAsia’s opening of direct flights from Kuala Lumpur to Kalibo, Aklan in April.

“As we move towards the attainment of the Asean Economic Community in 2015 and as close neighbors, it is high time for Malaysians and Filipinos to meet, engage and get to know more of each other’s peoples and countries,” Philippine Ambassador to Malaysia Eduardo Malaya said in a statement Friday.

The Kuala Lumpur to Kalibo direct international flight is the first for Kalibo and will fly four times a week starting April 18.

The nearest airport to Boracay is the Godofredo P. Ramos Airport in the town of Caticlan. From there, Boracay Island is just a boat ride away. Presently, only Cebu Pacific and Philippine Airlines Express have regular flights to Caticlan.

The new route of AirAsia will bring tourists closer to Boracay instead of having to go to the Ninoy Aquino International Airport in Manila.

“I have been to Boracay myself- and with its pristine waters, white sands, the bustling beach life, it is indeed one of the world’s best beaches,” Malaya said.

“The embassy considers tourism as a major factor in promoting and developing Philippine-Malaysia relations, notably in our people to people engagement,” he said.

Tourists from the Malaysia going into the Philippines numbered 109, 437 in 2013, the embassy said.

“Aside from the places they visited, what lingers in the minds of travelers after their stay in the Philippines is the warmth and hospitality of Filipinos,” Malaya said.

“I hope the Malaysians are excited enough to plan ahead to pack their bags, sunglasses and sarongs, stock up on sunblock and visit Boracay through AirAsia,” he said.
Source: http://business.inquirer.net/164563/airasia-to-open-kuala-lumpur-kalibo-route-in-april#ixzz2u8CQy4yL 

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Everyone Together Now?


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ASEAN states are scheduled to open their skies in 2015 – but major stumbling blocks remain, writes Simon Lewis.

A long time in the making, a move to open the skies of the economically dynamic region of South East Asia is set to be enacted in 2015 and the 10-nation Association of Southeast Asian Nations, or ASEAN, is outwardly confident its Open Skies policy is on track. However, there are suggestions that national interests are threatening to compromise a liberalisation that airlines hope would allow them to dramatically expand their route networks across the region.

First proposed as early as 1995, the regional deal for aviation, dubbed the ASEAN Open Skies policy, is part of a package of regional policies designed to create the so-called ASEAN Economic Community in 2015.

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The bloc includes wealthy and open economies such as Singapore alongside developing states such as Myanmar, which is emerging from oppressive military rule.

The start of a unified economic community, which aims to open up the movement of goods and skilled labour between the countries, was originally envisioned at the start of 2015, but is now slated for the last day of that year.

Indonesia

Indonesia, the largest member, with about 40% of the region’s 600 million people, could also prove to be a stumbling block in the scheme, with the country believed to favour a protectionist approach to open skies.

Despite this, within the Jakarta-based ASEAN Secretariat there is confidence that the new dawn in regional aviation will arrive on time.

“We are ahead of the schedule,” insists Tran Dong Phuong, the ASEAN Economic Community Department’s head of the Infrastructure Division.

Tran Dong Phuong says the legal instruments to enact the Open Skies policy have been in place since 2010, and the key parts have been ratified by all nations, except Indonesia and the Philippines. Even if some countries balk, those states that are willing to can go ahead with the plan, he says.

“It doesn’t have to wait until all members states have ratified, but it will come into force for individual members states when that member state ratifies it,” he says.

Infrastructure worries

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One stumbling block for the Philippines, and, crucially, Indonesia, is infrastructure, with concerns that both nations’ large networks of airports, many of which have not been recently upgraded, will be overwhelmed by liberalisation.

“If the agreements are implemented, the skies are open to every [ASEAN] airline to fly in. With the expected surge in aviation demand, the current infrastructure is not yet sufficient. So some governments would rather wait until they have developed infrastructure or increased capacity,” says Tran Dong Phuong.

“They are trying; they are investing in new airports or upgrading the current airports, so I think they will be able to implement in all countries by 2015,” he adds.

According to local media reports, the Philippines, which has 10 international airports, has plans to expand the capacity of Manila’s International Airport. This will be alongside a dramatic expansion of Clark Airport, which also serves the city, increasing the airport’s capacity from 2.5 million passengers per year to more than four million.

Indonesia has 29 international airports, but its Transport Ministry has said it only plans for five key airports – Jakarta, Surabaya, Medan, Denpasar and Makassar – to be opened up to airlines from other ASEAN states in 2015.

According to a report released this year by researchers Batari Saraswati and Hanaoka Shinya at the Tokyo Institute of Technology, Indonesia’s airports, which are all managed by state-owned companies, are already overstretched.

“The government has already fallen behind in providing adequate infrastructures. Sixteen of Indonesia’s 25 largest airports are currently operating above design capacity,” the report says, citing official data.

“Jakarta is the most congested, with existing terminals operating well above capacity and the airport’s two runways fully utilised during peak hours. The airport served more than 50 million passengers in 2012, more than twice its design capacity. A major upgrade project for [Jakarta’s] Soekarno-Hatta Airport finally commenced in 2013 and will increase the airport’s capacity to 62 million passengers,” it adds.

The researchers point out, however, that by the time that expansion is completed in 2015, the passenger traffic at Jakarta’s main airport will likely have exceeded the increased capacity.

Ready and willing

Outside Indonesia and the Philippines, there is more readiness.

In a statement, Malaysia Airports, a public company that operates most of the country’s airports, including Kuala Lumpur, said it was “fully supportive” of the efforts to open South East Asia’s skies.

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“It augurs well with the company’s aspiration of bringing in more passengers through its airports, as liberalisation would provide a less restrictive operating environment for airlines,” the company says.

“In taking cognisance of KLIA’s position as the main gateway to Malaysia, it is imperative that the flow of traffic is not impeded by restrictive aviation policies, thus enabling airlines to fully capitalise on the market potential,” it adds.

Malaysia Airports says it has capacity to handle more airlines operating more routes and is broadly supportive of liberalisation.

“The industry has always been moving towards some form of liberalisation through alternative means such as codeshares and revenue sharing. The benefits have been obvious and ASEAN Open Skies is a more formal approach towards such liberalisation,” it says.

Protecting flag carriers

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As well as the burden on infrastructure, some fear that opening up the region’s skies, which has been actively lobbied for by major airlines, may squeeze out smaller or state-owned competitors.

“There have been those concerns,” admits Tran Dong Phuong. “But at the end of the day, member states realise that the benefit brought along by more competition is overwhelming the challenges.”

With plenty of room for growth in South East Asian aviation, the risk of monopolies forming is minimal, he insists, pointing to the region’s unsaturated aviation market and strong economic growth.

Gross domestic product in ASEAN states is expected to continue its trend of healthy growth, with the International Monetary Fund predicting 5.6% GDP growth across the 10 members for 2013.

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IHS Global Insight predicted in May that the size of the 10 ASEAN states’ economies combined will more than double from $2 trillion to $4.7 trillion by 2020. That growth goes alongside growth in tourism and foreign investment in almost all ASEAN countries.

“With increasing business activity and regional growth, the opportunities are there for everyone, whether they are big or small airlines,” says Tran Dong Phuong.

“You can see that the number of low-cost airlines in ASEAN countries is growing. Every year there are new low-cost airlines opening in the region,” he adds.

Low-cost boom

According to CAPA – Center for Aviation’s yearbook for the South East Asia region, low-cost carriers are more dominant in some regional countries than anywhere else in the world.

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“The four largest domestic markets in South East Asia – Indonesia, Philippines, Malaysia and Thailand – all now have LCC penetration rates exceeding 50%,” it says, predicting that penetration in the Philippines would reach 85% this year.

CAPA adds that, while some of the low-cost carriers were approaching saturation on current routes, “market conditions overall remain favourable and can support rapid growth, driven by the strength of the region’s economy and the continued rapid rise of the middle class.

“The increase in discretionary incomes feeds into the hands of LCCs as a larger portion of the population can afford to fly but generally only on budget airlines,” it adds.

“South East Asian flag carriers are also growing, particularly their budget and regional full-service subsidiaries, albeit at slower rates.”

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Not an EU carbon copy 

It is hoped the Open Skies policy will be a boost for regional carriers, but it is not planned to be a complete single aviation market like Europe’s unified skies.

All states, except the Philippines and Indonesia, have signed up to giving third, fourth and fifth freedoms to other member states. However, Indonesia, Laos and Cambodia have not yet agreed to extend the rights beyond their capital cities. And without full agreement on the current modest Open Skies proposal, seventh right freedoms, which allow flying between two other countries without a link back home, and the right to fly routes between airports inside a foreign country, are not yet even being considered.

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“The ASEAN Open Skies just opens the skies to give the right to an airline from the ASEAN member state to carry passengers from their own country to another ASEAN country, and then from there to a third ASEAN country,” says Tran Dong Phuong.

He explains the ASEAN model was never intended to be a carbon copy of the European Union’s aviation market. This means that ownership rules and other aviation freedoms, like the right for airlines to fly routes between two other countries without originating in its home country, are still off the table.

“The EU is a single airspace, a single aviation market, so they are operating like within one country in the whole EU. Whereas, in ASEAN, we are not up to that stage yet.”

Alan Khee-Jin Tan, professor of aviation law at the National University of Singapore, has also stressed that the most important contrarian nation is Indonesia.

“There is no guarantee that Indonesia will accept the agreements by 2015,” Professor Tan says.

“If it, and the other member states, do accept by 2015, there will be effectively open skies for the region, but this stops at third, fourth and fifth freedom relaxations. So, it is true that there is a chance the project might come into effect by 2015, in this limited way.

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“Although there are obviously still benefits to this, Indonesia’s staying out will hamper the project significantly since it is the region’s largest economy and has nearly half the entire population of ASEAN,” Tan says.

“So, there will still be a positive overall impact, just that if Indonesia stays out, the impact will be much reduced in significance.”

Scope for expansion

Tan says in the long-term it is critical for the region to look at seventh freedom rights.

Such liberalisation would certainly be even more of a sticking point for protectionist-minded policy-makers, and would force airlines to compete with carriers from other countries on every transnational route.

But, Tan says, a failure to open up the seventh freedom – what he calls “the true hallmark of a real ‘single’ aviation market” – would hurt regional airlines when it comes to connecting the region to the rest of the world.

“The effect of not having seventh freedom rights can be detrimental to ASEAN airlines,” he says.

“This is because, apart from the intra-ASEAN agreements, ASEAN has adopted an agreement with China that provides unlimited third and fourth freedom access for airlines from both sides. The effect is that Chinese carriers will be able to connect any point in China – since China is a unified market – with any point in ASEAN member states that accepts this agreement.”

But Tan says that, without the seventh freedom rights, a Thai carrier would not be able to connect Singapore and Shanghai, and therefore regional airlines would miss out on opportunities to expand.

The ASEAN bloc has had some success in fostering economic ties in the region, preventing conflict and creating some sense of peoples united, despite the many differences that divide states. As Tan points out, regional co-operation is based on consensus in ASEAN, and the group’s secretariat has little power to strong-arm members into anything.

“[The] problem is that we are not like the EU where there is the European Commission which can force member states to adhere to community law,” he says.

With economic integration on its way, this region could become a powerful force in aviation, if it sticks together, that is.

Source: Routes News 2013 Issue 6.