Malaysian think tank IDEAS has proposed the concept of an “ASEAN Community Carrier.”
The concept is for all ASEAN members to have a policy for airlines established, for the purpose of travel between ASEAN member countries, with no restriction of ownership and landing rights.
“Asean grew through trade between member countries with the aviation industry playing a vital role in connecting between Asean member states.
“In light of enhancing the aviation market in Asean, IDEAS’ new policy paper ‘Ownership and Control of Airlines in Southeast Asia: Prospect for an Asean Community Carrier’ explores the opportunities and challenges in forming an Asean community carrier by examining the ownership and control of airlines in Southeast Asia,” said IDEAS in a statement.
National University of Singapore Law School professor, Alan Tan Khee Jin, penned the paper. Jin also happens to be an expert in aviation law.
IDEAS said that when it comes to the aviation industry, nearly all Asean member countries implement a protectionist policy.
“There are two types of restrictions that exist in the aviation industry which are ‘internal lock’ under the domestic law and ‘external lock’ under the international law.
“The ‘internal lock’ is explained as the restriction in which airlines can be licensed for operation only if majority ownership and control reside in the nationals of that country.
“The ‘external lock’ is described as the restriction in which air services agreement between two countries will provide that the designated airlines to operate services between them must be ‘substantially owned and effectively controlled’ by their respective nationals,” the paper clarified.
It went on to say that while individual nations can elect to do away with the “internal lock” by changing their own laws, the same couldn’t be said for the “external lock.”
The IDEAS paper then cited how Australia permits foreigners to completely 100% own and operate an airline in Australia under its domestic law.
“However, such an airline can only fly domestic routes. The moment it wishes to fly elsewhere, it would come up against the ‘external lock’ found in Australia’s bilateral air services agreements with other countries,” the paper said.
However, the paper pinpointed that there are a few shortcomings to liberalizing ownership and control of airlines in Asean member countries for the “Asean Community Carrier”.
“Domestic laws in the individual Asean states must explicitly allow for other Asean nationals to hold majority ownership and effective control in their airlines so that community carriers can be established and designated.
“Also, each Asean state must explicitly allow other Asean states’ designated community carriers full access to its points,” IDEAS said, referring to having no restriction on landing rights within the region.
To completely attain the Asean community carrier, the paper proposed that Asean countries tweak domestic laws to let non-national majority ownership and regulate and amend Asean pacts to eliminate the consent of individual states to a community carrier’s operations.