Air Transport : the agreement, which will open a boulevard for the low-cost airline to Asia

The negotiations are not completed. But when they will be, the air service between Europe and south-east Asia, upside down for more than ten years by the power companies in the Gulf, is likely to be again disrupted over the next few years. For more than a year, the european Commission and the Association of nations of south-east Asia (Asean), comprising Indonesia, the Philippines, Singapore, Malaysia, Thailand, Brunei, Vietnam, Laos, Burma and Cambodia, negotiate and effect the terms of an air agreement between the two economic areas.

Agreement in order to 2018

The latter is well engaged, since, after four rounds of negotiations, could be finalized next year, while the two parties have caressed, a time, the ambition of toper as early as 2017 for the 40th anniversary of their cooperation. These negotiations between two blocs of countries is a first in the history of air transport.

The aim is to sign an open skies agreement is related only to the ” first four freedoms of the air “, namely those that enable a company to disembark and embark passengers in a third country, without including the rights of the 5th freedom (permission for a company of a third country ensure that flights between two third countries), as is the case in the open skies agreement between the european Union and the United States. The idea behind is to create a global market between these two blocks of countries without a cap on the number of links.

| Read here : The freedoms of the air, kézako?

For all that, to the extent that these two geographical areas are diametrically opposed in the establishment of an internal market with the european side, a scheme led while it is in its infancy in ASEAN, the airlines will not have the same possibilities, depending on whether they are european or asian. At least in a first time.

Air France, for example, will be able to serve any destination in the ASEAN starting from any point in europe. In contrast, Singapore Airlines could not serve the european Union and the departure of Singapore. However, provisions that allow asian companies to take off to other ASEAN countries later should be included in the agreement.

Fight against the companies of the Gulf

There are several frameworks of this agreement. In general, it can be a way for european and asian companies to regain market share on the companies in the Gulf such as Emirates, Etihad Airways, Qatar Airways, but also Turkish Airlines, which, in the last ten years, have captured a significant share of this market via their hub in the Middle East.

“Improve connections on a bilateral basis between the european countries and ASEAN is one of the ways to avoid the traffic out in the Gulf,” said a connoisseur of the folder. This is true.

Competition from low-cost long-haul

However, this agreement is not a good news than this for the major Majors in europe. As it will also accentuate the competition to be bilateral.
In effect, such an agreement also allows you to open a boulevard for the low-cost airlines on long-haul european, such as Eurowings (Lufthansa), Level (a subsidiary of IAG), French Blue, XL Airways, or even Norwegian. Because if the agreement does not include Norway, as is the case in the one in force between the european Union and the United States, Norwegian has a european subsidiary in Ireland, Norwegian International (NAI), which will have the right to serve the ASEAN countries at the start of the european Union.

This point is not neutral for Air France and its new subsidiary, long-e-Joon, whose primary vocation is to respond to the companies of the Gulf. It term risk of having to not only rub shoulders with carriers in the Middle East but also in some low-cost european-or even, in the future, an offer densified asian companies, not only classical, but also low-cost, such as Asia or Scoot (subsidiary of low-cost long-haul Singapore Airlines).

Leave a Reply