11 Feb, 2014

Full Backgrounder: Why Europe is seeking an Open Skies Pact with ASEAN?

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Brussels, 10 February 2014, European Commission Memo on the EU–ASEAN¹ Aviation Summit – Towards stronger relations in aviation

Frequently asked questions

EU-ASEAN in figures

1. The EU traded with ASEAN more than €206 billion in goods and services in 2011
2. ASEAN is the EU’s 3rd largest trading partner outside Europe.
3. The EU is ASEAN’s 2nd largest trading partner after China, accounting for around 11% of ASEAN trade.
4. The EU is by far the largest investor in ASEAN countries, with EU companies holding around one quarter of all foreign direct investment (FDI) stock in ASEAN. EU companies have invested around €9.1 billion annually on average (2000-2009).
5. With a combined population of 1.1 billion, the EU-ASEAN air transport market is of increasing strategic importance to both sides.
6. Air traffic between the EU and ASEAN has also been growing steadily and nearly doubled over the last 15 years to reach more than 10 million passengers in 2012.
7. Passenger air traffic between Europe and Southeast Asia is expected to grow by an average rate of 5% per year over the next 20 years.
8. See Annex for more EU-ASEAN air traffic figures

What is the state of play of EU-ASEAN relations?

1. The EU and ASEAN have a long history of strong commercial ties. Over the past 40 years, the EU and ASEAN have strengthened their dialogue which in 2007 was upgraded to an EU-ASEAN Enhanced Partnership.
2. The EU and ASEAN share a commitment to regional integration as a means of fostering regional stability, building prosperity, and addressing global challenges.
3. The two regions’ wider economies benefit immensely from aviation, which creates and facilitates growth, employment, tourism and connectivity with the rest of the world.
4. The EU has already signed so-called Horizontal air transport Agreements (bilateral agreement) with several ASEAN Member States: Singapore (2006), Malaysia (2007), Vietnam (2010), and Indonesia (2011), and with a prospect to sign also with the Philippines and Cambodia.
5. The EU is funding a technical cooperation and assistance project which is supporting the creation of the ASEAN Single Aviation Market. The “ASEAN Air Transport Integration Project” (AATIP) was launched in 2012 with a budget of 4.7 million € for the period 2012-2016. More information on the AATIP in the Annex further below.

What do we want to achieve?

1. In September 2012, the European Commission identified ASEAN as a region offering new interesting opportunities for cooperation, including a comprehensive aviation agreement at some stage. In December 2012, the Council of the EU welcomed the EC’s intention to organise jointly with ASEAN an EU-ASEAN Aviation Summit with the aim of enhancing EU-ASEAN aviation relations. In May 2013, the European Parliament, in its resolution on the EU’s external aviation policy, called on the Council of the EU to grant the European Commission a mandate to negotiate comprehensive air transport agreements with fast-growing economies including ASEAN.
2. The ASEAN Transport Ministers have expressed a clear interest in enhancing EU-ASEAN aviation cooperation leading to a, EU-ASEAN Comprehensive Air Transport Agreement.
3. A comprehensive EU-ASEAN aviation agreement would generate significant benefits for both sides not only in terms of market liberalisation, but also in ensuring regulatory convergence, fair competition, and more trade and investment.
4. Such agreement would require the support of EU Member States for the granting of a mandate to the Commission for negotiating a comprehensive air transport agreement with ASEAN.

Why would ASEAN and the EU be good partners in aviation?

1. Both EU and ASEAN have dynamic aviation markets which offer new opportunities for cooperation in this sector. There is much to gain, on both sides, by a close cooperation.
2. With a total population of 600 million, high economic growth – projected at 5% per annum over the next 10 years – and on-going market integration and liberalisation, ASEAN offers attractive opportunities to EU airlines, airports and manufacturing industry.
3. Airlines in ASEAN are expected to take delivery of almost 3,000 aircraft worth close to €500 billion by 2032. There is also a need for massive expansion of airport and air traffic management infrastructure as well as other aviation-related products and services such as aircraft maintenance, repair and overhaul.
4. ASEAN is in the process of further regional integration, aiming at the realisation of an ASEAN Community including an ASEAN Economic Community (AEC) by 2015. Aviation is a key pillar supporting the establishment of the AEC via facilitating the free, efficient, safe and secure movement of people and goods within and potentially beyond ASEAN.
5. While at different stages of maturity, the EU and ASEAN regional integration process have many similarities including in the aviation sector where both are creating single aviation markets within their region.
6. ASEAN is on course to create by 2015 an ASEAN Single Aviation Market (ASAM), which will have many similarities to the open regional aviation market in Europe. This offers new opportunities for cooperation between the EU and ASEAN in aviation.
7. The development of a single aviation area in ASEAN countries is based on common rules and market opening. This is just what the EU did in the past two decades, creating what is today the largest and most successful example of regional aviation market in the world, creating significant benefits for EU consumers, the EU aviation industry and the overall EU economy.

Background information

The EU has signed comprehensive air transport agreements with: USA, Canada, Western Balkans, Morocco, Jordan, Georgia, Moldova, and Israel. An agreement will soon be signed with Ukraine. Negotiations are expected soon to be finalised with Brazil. Negotiations are ongoing with Tunisia, Azerbaijan and Lebanon and may also start with Armenia. The Commission also has mandates to negotiate with Australia, New Zealand and Algeria.

Annexes

EU-ASEAN Aviation Markets Statistics²

Annual average traffic growth between the EU and ASEAN (direct traffic only) by passengers and freight

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.

Direct EU-ASEAN air traffic has also grown, but not as rapidly, 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 traffic³ between 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%.

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.

Top-20 EU airports by passengers flying to ASEAN in 2012⁴

	2012	% of total top-20 passenger traffic	2011	%-change 2012/2011
LONDON Heathrow	2,394,664	23.40%	2,205,684	8.6%
FRANKFURT	1,731,120	16.92%	1,590,126	8.9%
AMSTERDAM	1,565,907	15.30%	1,563,054	0.2%
PARIS-CDG	1,449,738	14.17%	1,413,774	2.5%
HELSINKI	559,916	5.47%	471,673	18.7%
COPENHAGEN	519,545	5.08%	506,112	2.7%
MUNCHEN	400,554	3.91%	470,653	-14.9%
STOCKHOLM	382,135	3.73%	398,672	-4.1%
VIENNA	214,318	2.09%	194,520	10.2%
MILANO	206,074	2.01%	204,815	0.6%
ROMA	183,665	1.79%	243,040	-24.4%
LONDON Gatwick	110,146	1.08%	29,224	276.9%
MANCHESTER	101,571	0.99%	90,894	11.7%
BRUSSELS	90,249	0.88%	16,982	431.4%
BARCELONA	85,612	0.84%	88,370	-3.1%
MADRID	84,523	0.83%	85,600	-1.3%
BERLIN Tegel	47,944	0.47%	113,310	-57.7%
ATHENS	39,774	0.39%	102,302	-61.1%
DUSSELDORF	34,046	0.33%	111,640	-69.5%
GOTHENBURG	31,904	0.31%	33,141	-3.7%
Total Top-20	10,233,405	100.00%	9,933,586	3.02 %

 

Top-15 ASEAN airports by passengers flying to the EU in 2012⁵

	2012	2011	%-change 2012/2011
SINGAPORE	3,538,923	3,220,769	9.9%
BANGKOK Suvarnabhumi	3,001,154	2,957,760	1.5%
KUALA LUMPUR	1,252,208	1,452,645	-13.8%
BANGKOK Don Mueang	806,920	823,428	-2.0%
PHUKET	397,857	460,151	-13.5%
HO CHI MINH CITY	327,801	289,043	13.4%
HANOI	314,728	278,612	13.0%
MANILA	164,102	239,806	-31.6%
JAKARTA	153,028	203,721	-24.9%
BALI/NGURAH RAI	108,577	86,180	26.0%
BRUNEI International	104,449	123,606	-15.5%
KRABI	93,776	76,154	23.1%
HANOI	35,859	39,303	-8.8%
PHNOM PENH	21,745	19,378	12.2%
PULAU Langkawi International	7,663	5,465	40.2%
Total Top-15	10,328,790	10,276,021	0.51%

 

Top-20 EU-ASEAN city pairs⁶

These city pairs represent over 75% of passenger traffic between EU and ASEAN

	2012	2011	%-change 2012/2011
LONDON – SINGAPORE	1,166,982	1,069,706	9.1%
FRANKFURT – SINGAPORE	759,470	590,714	28.6%
LONDON – BANGKOK	636,840	579,177	10.0%
FRANKFURT – BANGKOK	587,105	582,453	0.8%
LONDON – KUALA LUMPUR	525,317	589,786	-10.9%
PARIS – SINGAPORE	475,771	460,364	3.3%
AMSTERDAM – BANGKOK	440,801	363,262	21.3%
PARIS – BANGKOK	412,202	422,438	-2.4%
AMSTERDAM – KUALA LUMPUR	390,519	395,889	-1.4%
COPENHAGEN – BANGKOK	372,069	371,919	0.0%
AMSTERDAM – SINGAPORE	331,542	325,929	1.7%
HELSINKI – BANGKOK	258,895	246,694	4.9%
STOCKHOLM – BANGKOK	227,198	228,794	-0.7%
VIENNA – BANGKOK	214,131	194,520	10.1%
MUNCHEN – BANGKOK	211,681	212,669	-0.5%
PARIS – KUALA LUMPUR	196,210	252,882	-22.4%
PARIS – HO CHI MINH CITY	180,812	182,208	-0.8%
PARIS – HANOI	180,751	148,946	21.4%
AMSTERDAM – MANILA	164,102	239,806	-31.6%
HELSINKI – SINGAPORE	157,556	85,057	85.2%

 

Top-20 EU and ASEAN air carriers by seats supply in 2013⁷

Top-3 carriers had over 50% share of the yearly seats supply between EU and ASEAN

		2013	% of total seats	2012	Change-% 2012/2013
SINGAPORE AIRLINES	SG	2,872,428	22.9 %	2,697,292	20.5 %
THAI AIRWAYS	TH	2,872,012	22.9 %	2,743,832	20.9 %
MALAYSIA AIRLINES	MY	1,382,784	11.0 %	1,160,848	8.8 %
KLM	NL	739,128	5.9 %	848,068	6.4 %
BRITISH AIRWAYS	GB	719,030	5.7 %	710,528	5.4 %
VIETNAM AIRLINES	VN	670,488	5.3 %	686,452	5.2 %
LUFTHANSA	DE	628,628	5.0 %	761,072	5.8 %
AIR FRANCE	FR	608,764	4.9 %	491,088	3.7 %
FINNAIR	FI	498,212	4.0 %	511,420	3.9 %
QANTAS AIRWAYS	AU	456,092	3.6 %	1,059,604	8.1 %
EVA AIRWAYS	TW	409,344	3.3 %	392,808	3.0 %
CHINA AIRLINES	TW	236,964	1.9 %	281,008	2.1 %
AUSTRIAN AIRLINES	AT	223,496	1.8 %	223,496	1.7 %
SAS	SE	89,180	0.7 %	165,620	1.3 %
CONDOR FLUGDIENST	DE	56,160	0.4 %	13,936	0.1 %
NORWEGIAN AIR SHUTTLE	NO	39,000	0.3 %
BLUE PANORAMA AIRLINES	IT	21,840	0.2 %	21,840	0.2 %
JETAIRFLY	BE	13,364	0.1 %	26,728	0.2 %

In 2013, every EU citizen had on average approximately 2.3 seats available on intra-EU and extra-EU flights.

In ASEAN the corresponding ratio was 0.7.

Economic benefits of the of EU-ASEAN air transport liberalisation⁸

Summary of quantified economic benefits for first year of liberalisation of the EU-ASEAN air transport market

	Estimated Benefit
Traffic stimulated (passengers)	860,000
Consumer surplus (€ million)	460 to 930
Employment: jobs created (excluding tourism)	2,400

 

ASEAN Air Transport Integration Project (AATIP)

ASEAN has set the target of realising an ASEAN Single Aviation Market (ASAM) by 2015. This will require not only air services liberalisation, but also coming to an agreement on fundamental issues of a single aviation market, such as industry structure, liberalisation of ancillary air services, air traffic management and control, and air safety and security.

A number of pillars are needed to support regional integration such as regulatory convergence (common safety standards and rules), enhancing the institutional capacities of individual states and regional institution building (setting up regional mechanisms).

The overall objective of AATIP is to contribute towards sustainable ASEAN economic growth and the integration of the ASEAN Economic Community (AEC), through the development of the civil air transport sector. In order to support this objective, AATIP will facilitate the development of frameworks to strengthen institutional capacities within ASEAN with a view to supporting the achievement of a safe, secure and sustainable ASEAN Single Aviation Market based on high regulatory standards.

EASA, the European Aviation Safety Agency, has been appointed as the implementing body of AATIP and has formed a consortium with EUROCONTROL, the UK Civil Aviation Authority and the French DGAC (Civil Aviation Authority).

AATIP in brief:

1. Project duration: 2012 – 2016
2. Budget: 4.7 million €
3. Areas covered: Aviation Safety, ATM (Air Traffic Management) and Economic Market Regulation.

The two main expected results are:

• Preparation for the ASEAN Single Aviation Market (ASAM) and its external linkages supported through the development of harmonised frameworks in aviation safety, security, air traffic management, environmental protection, market liberalisation, application of competition laws and economic regulations.

• Progress towards ASEAN institutional development, i.e. institutional reforms and ASEAN Air Transport Institutions’ building, and capacity of the ASEAN Secretariat and ASEAN Member States’ authorities, operators and industry strengthened.