EU-ASEAN Aviation Summit Proposes Open Skies Agreement

In a Joint Declaration adopted this week in Singapore at the end of a successful two-day EU-ASEAN Aviation Summit, the European Commission and the Association of Southeast Asian Nations (ASEAN1) proposed to take aviation cooperation to a new level by negotiating a comprehensive air transport agreement between the EU and ASEAN. The Summit brought together some 300 political and business leaders including a number of EU and ASEAN Transport Ministers.

Over the two days leaders discussed the rich opportunities in the EU and ASEAN aviation markets and the benefits which both the EU and ASEAN stand to achieve from greater market access and integration in air services and the aviation industry, cooperation to enhance the efficiency of air traffic management and harmonisation of safety and security standards, amongst others. In particular, the Summit noted these and more potential benefits that the peoples and companies of both regions could enjoy from a comprehensive air transport agreement between the EU and ASEAN.

The ASEAN region encompasses ten South East Asian countries: Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar (Burma), Philippines, Singapore, Thailand, and Vietnam.

ASEAN is developing, by 2015, an ASEAN Single Aviation Market which will have many similarities to the single aviation market that the EU has successfully created over the past two decades. This offers interesting new opportunities for cooperation between the EU and ASEAN.

“If Europe works together with ASEAN to the fullest extent, we can extend the proven benefits of our respective single aviation markets to a much larger inter-regional one,” said Siim Kallas, the Commission vice president in charge of Transport. “The Summit has created much new momentum for closer cooperation and made a convincing case for embarking on what could be a first aviation agreement in the world between two important blocs of countries like the EU and ASEAN.”

In order to be in a position to negotiate an agreement with ASEAN, the Commission will need a negotiating mandate from the Council of Transport Ministers of the 28 EU Member States. A proposal will now be sent to the European Commission to seek authorisation from the Council of the European Union to start negotiations on an EU-ASEAN comprehensive air transport agreement.

Total origin-destination traffic between the EU and ASEAN (regardless of whether direct or via an intermediate point) and transfer traffic continuing beyond the EU and/or ASEAN (e.g. traffic from Europe to Australia via ASEAN) has been growing steadily. Between 2007 and 2012, such traffic registered a strong CAGR of 4%. This highlights the increasing strategic and economic importance to both sides of the EU-ASEAN air transport market, which serves a combined population of over 1.1 billion.

This announcement was welcomed by the ASEAN Transport Ministers. The current Chairman of the ASEAN Transport Ministers, Mr Sommad Pholsena, Minister of Public Works and Transport of Lao PDR said: "While ASEAN and the EU already have much in common in aviation, including their commitment to establishing Single Aviation Markets in their respective regions, both sides stand to benefit significantly from even closer cooperation.”

“Apart from allowing both sides to better capitalize on the opportunities in and the capabilities of each other, a bloc-to-bloc agreement would also facilitate further intra-ASEAN integration by allowing ASEAN to learn from the EU’s experience in developing a Single Aviation Market since the 1990s," he added.

ASEAN’s first air transport agreement as a bloc was with the People’s Republic of China which entered into force in 2011. ASEAN has also initiated discussions with Japan and the Republic of Korea with a view to concluding similar air transport agreements.

Direct EU-ASEAN air traffic has grown with a compound annual growth rate (CAGR) of 1.1% between 2007 and 2012, slower than growth of total extra-EU air traffic. One of the reasons for the relatively low growth in EU-ASEAN direct air traffic, despite growth in overall traffic, is that traffic between the EU and regions such as ASEAN is increasingly routed via hubs in the Gulf (Dubai, Doha and Abu Dhabi), rather than hubs in, for example, Europe itself. Between 2009 and 2013, air passenger trafficbetween EU and Gulf-states grew by an annual rate of 15.4% while air passenger traffic between the Gulf and ASEAN grew annually 11.8%.

Air traffic between the EU and ASEAN has been growing steadily in recent years and has nearly doubled over the last 15 years to reach more than 10 million passengers in 2012. With a combined population of 1.1 billion, the EU-ASEAN air transport market is of increasing strategic importance to both sides with an expected average growth rate of five per cent per year over the next 20 years.

Half of the world's traffic growth over the next 20 years will be to, from, or within the Asia-Pacific region, which will become the world leader in air traffic by 2030 with a market share of 38 per cent. ASEAN, with its rapid economic development and rising incomes, will be at the very centre of this development.

In 2012, direct EU-ASEAN passenger traffic represented 3.3% of the total extra-EU passenger traffic while the EU-ASEAN freight traffic represented 5.6% of the total extra-EU freight traffic. In 2013, ASEAN-EU traffic represented 7.8% of the total extra-ASEAN seats available.

The EU has negotiated comprehensive air transport agreements with the United States, Canada, Morocco, the Western Balkan countries, Jordan, Georgia, Moldova and Israel and an agreement is expected to be signed in March 2014 with Ukraine. Negotiations are expected to be completed with Brazil in the near future and negotiations are on-going with Azerbaijan, Tunisia and Lebanon.

In the table below we highlight the top twenty city pairs between Europe and ASEAN based on passenger traffic in 2012. These accounted for more than 75 per cent of the total passenger traffic between the two regions during that year.