Transcript Liberalisation of Air Services in the APEC(v2)

Liberalisation of Air Services in
the APEC Region
1995-2005
Australia
Richard Wood
Department of Transport and
Regional services
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Background
 At the TPT-WG26 in Vladivostok in September 2005 it was
decided to develop a project to assess progress of
liberalisation of air services in the APEC region over the
past decade;
 Purpose – identifying the extent to which the Bogor Goals
have been met in developed and developing countries;
 The project report was intended to inform the Ministerial
Meeting in Adelaide on 28-30 March 2007;
 The project report was implemented by an independent
consultant and does not necessarily reflect Australia’s
views.
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Project Objectives

CAPA Consulting was retained by the Australian
Department of Transport and Regional Services (DOTARS),
on behalf of the APEC Secretariat, to undertake the
following study:
1) Identify existing barriers to liberalisation, and specific
areas where there is scope for further development;
2) Determine progress with the liberalisation of air
services in the APEC region between 1995 and 2005;
3) Indicate where efforts should be focused in future to
achieve the targeted reforms agreed under the Eight
Options for More Competitive Air Services with Fair and
Equitable Opportunity.
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Methodology
Methodology
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CAPA’s model utilised a combination of indicators for air
services between APEC economies relating to:
1) Changes to Structures of Bilateral Air Service Agreements
(based on Eight Options);
2) Performance of APEC economies & hub airports (GDP,
overseas visitors, designated airlines, capacity, flight
frequency);
Statistics, where possible, are aggregated and assessed at
three yearly intervals (the base year 1995, 2000 and 2005);
The results are qualified and analysed to determine the rate
and nature of progress achieved, and identify deficiencies.
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Data Model
Data Model
Coverage
Data Categories
APEC Economy
• GDP (in Current US$)
• Annual Inbound Visitors
• Annual Outbound Residents
• No. primary/secondary
airports
Sources: IMF, PATA,
National Tourism Data,
CIA World Factbook
Economy-Economy
Sources: ICAO,IATA,
APEC, OAG
Hub Airport
Source: ACI
Airport-Economy
Sources: IATA, OAG
Hub Airport-Hub
Sources: IATA, OAG,
AAPA, CAPA Database
Years
- 1995,2000,2005
- 1995,2000,2005
- 1995,2000,2005
- 1995,2000,2005
- 1995,2000,2005
• No. Bilateral Agreements
• Average Weekly Seats
- 2000,2005
• Average Weekly Frequencies - 2000,2005
• International Passengers
• International Freight Traffic
- 1995,2000,2005
- 1995,2000,2005
• No. City Pairs
• No. International Operators
- 1995,2000,2005
- 1995,2000,2005
- 1995,2000,2005
• Average Weekly Seats
• Average Weekly Frequencies - 1995,2000,2005
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Limiting Factors
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Development of meaningful comparisons of progress on
liberalisation post 1995 constrained by:
1) Non-availability of historic information on bilateral air
service agreements between APEC economies for 1995;
2) Significant variation in the quantity and quality of survey
returns from APEC countries;
3) Limited data was accessible on the available capacity of the
countries at the different time intervals;
The model was adapted to reflect these difficulties;
As a result, CAPA relied to a greater extent on performance
indicators for its findings.
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Conclusions
Key Findings
 There has been a considerable increase in:
• The number of bilateral agreements between APEC
economies;
• The spread of city pairs operated within the region;
• Numbers of international airlines serving APEC-related
routes;
• Seat capacity and frequencies between hub airports;
• Capacity growth between APEC economies was more
moderate.
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Key Findings
Key Findings
Impediments to further liberalisation:
 Government policy issues
• Governments’ reluctance to relax ownership and
control;
• Effects of competition policy – the enactment of
competition or antitrust legislation in several
economies makes it difficult for carriers to
merge/consolidate operations;
• Continuing protection for government owned carriers;
• While carriers are undergoing restructuring,
governments less likely endorse market liberalisation.
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Key Findings
Key Findings
Impediments to further liberalisation:
 Key industry issues
• Growing pressure on airports’ infrastructure and
capacity (i.e. slots);
• Skills shortages – pilots, maintenance engineers, cabin
crew;
• Rise in jet fuel prices.
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Conclusions
Conclusions
 Much of the growth achieved can be linked to relaxation
of restrictions on designation, freight, charters, code
sharing and enhanced market access;
 Enhanced market access achieved through increased
3rd/4th freedom capacity and new routes.
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Conclusions
Conclusions
 5th freedom capacity remain restricted and 7th freedom
remains virtually non-existent (other than for cargo-only
flights);
 Little progress in moving to more liberal ownership and
control provisions;
 Growth has taken place with highly uneven degrees of
liberalisation across individual economies. The APEC
economies are moving toward more liberal provisions
within their ASAs with each other but with different
speeds and priorities.
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Development of future strategy
Development of Future Strategy
Report Suggests:
 Establish a dual approach to the Eight Options
programme by differentiating targets between developed
and developing countries;
 Designate the achievement of reforms to ownership
regulations as a hight priority and consider the
introduction of an interim target of removing effective
control provisions from bilateral agreements.
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Development of future strategy
Development of Future Strategy
Report Suggests:
 Encourage more aggressive adoption of open 5th freedom
rights, as a means of conferring greater
economic/tourism benefits and building competition;
 Accelerate the removal of restrictions on cargo-only
services to enhance the flow of trade across the region;
 Continue incremental development of other aspects of
the Eight Options with the objective of achieving greater
progress with liberalisation of market access, tariffs,
charters and business activities.
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