Singapore: South East Asian aviation industry on the rise

The recent continued reform of various agreements is expected to drive the development of 'Open Skies' policies in various regions of Southeast Asia, which in turn will increase air travel and boost growth of the aviation industry in the region.  

Increased flexibility, route coverage and profitability as a result of these open skies policies is expected to contribute to these developments.

According to Neil Dave, Consulting Analyst, Aerospace & Defense, Frost & Sullivan Asia Pacific, "The ASEAN aviation market will develop significantly in the next few years with considerable increases in infrastructure investment and planned policies in the making which will encourage this growth momentum."

"Consumers will look to benefit from increased choice of destinations, routes and greater affordability with rising standards of living and cost-savings passed down from airlines due to improved efficiency and maximization of profits," added Dave.

According to Frost & Sullivan, the demand for a well-knit air travel infrastructure system and the increasing demand for low-cost travel are the main drivers for the implementation of open skies policies in the ASEAN region.

"Many ASEAN countries currently lack comprehensive and well developed ground transport infrastructure and countries in these regions are divided by vast seas, therefore there is a demand for a well-knit, flexible air-transport system." said Dave.

"Also, with the increasing popularity of air-travel as mode of transport, there is a rise in demand for low cost travel among countries in the ASEAN region which are not connected," Dave continued.

However, the implementation of open skies policies may adversely affect growth of aviation, especially in countries with a developing aviation industry. Stiff competition from mature, foreign players may eventually squeeze out smaller players from a developing aviation industry leading to loss of aviation related jobs.

Dave cautioned, "Although this competition is a natural by-product of the introduction of such laws, it is essential to also note the impact that open skies policies can have on the national airline companies."

He observed, "Countries such as India and China have been experiencing rapid growth in air transport services and domestic aviation infrastructure and are major competitors in the market. Other ASEAN countries will be forced to improve their air transport services across the region to remain competitive,"

Moreover, there are several restraints in the implementation of open skies policies in the ASEAN region. The current lack of infrastructure in developing ASEAN countries to support the change in policy may lead to overcapacity of airports.

With the increase of air-travel within the ASEAN region, the over-utilization of air-space and technical delays may result in a high possibility of air routes within the region becoming overly congested.

However, in the long run, Frost & Sullivan predicts the implementation of open skies policies will bring about real and spill-over benefits to various industries. With ASEAN countries being some of the main exporters of electronic goods globally, the open skies agreements will look to boost economic and trade growth.

Furthermore, the strong trade and tourism industries are set to improve as demand for air transport continues to rise among these regions.

In order to better implement open skies and support growth in the AEC (ASEAN Economic Community), the ASEAN Single Aviation Market (ASAM) is concurrently pAdidas Predator Tango EVA