and Effects of Open Skies Policy

２０１０年６月３日国際航空セミナー

Overview and Effects of Open Skies Policy

Makoto WashizuChairman, Japan International Transport Institute

鷲頭誠国際問題研究所所長


Topics of Today’s Seminar

Impacts of international air transport on tourism

Open skies from European perspective

Open skies from Asian perspective

Before starting these speeches…

… brief overview of policy development of international aviation.

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Outline

History of Japanese Aviation Policy

Elements of Typical Open Skies Bilaterals

U.S.‐EU Open Skies Agreement

Japan‐U.S. Negotiations

Effects of Open Skies: Code Share Alliances, ATI and JVs

Benefits of Open Skies

Case Studies

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History of Japanese Aviation Policy

1952 First Air Services Agreement (JPN‐US ASA)Traditional ASA called “Bermuda Agreement Type”

1985 Multiple designation of airlines

1990s Deregulations of air fares

2000 Abolishment of supply‐demand control in domestic market

2007 Asia Gateway InitiativesTo create strategic international aviation network through “Asia Open Skies”

To open up Haneda to more international flights

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Elements of Typical Open Skies Bilaterals

Open route rights

Unlimited carrier designation

No restrictions on capacity, frequencies or aircraft type

Pricing determined by market forces

Cooperative marketing arrangements like code‐sharing and wet‐leasing

Liberal charter regimesetc.

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U.S.‐EU Open Skies AgreementFirst Stage took effect on March 30, 2008.

Second Stage negotiations began in May 2008 and ended in March 2010.

Agreement focuses on “soft” rights—pledges to cooperate, coordinate and confer in the future on sensitive issues like ownership.

Major changes in Agreement include:Reciprocal recognition of fitness and citizenship determinations

Cooperation on environmental issues like aircraft noise and carbon trading

Further expansion of market access opportunities

Expansion of EU carrier access to Fly America Traffic

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Japan – US Aviation Relationships

1952 Japan – US Air Services AgreementImbalance between JPN/US ‐‐‐ number of airlines and traffic rights.

1985 MOU“Non‐incumbent carriers” eg. ANA, NCA.

1998 MOUEqualized numbers of incumbent carriers.No limit of traffic rights for incumbent carriers.Restrictions for non‐incumbents remained.Imbalance of slot share at NRT remained.

2009 Agreement

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Japan – US Aviation RelationshipsAirport capacity increases in 2010.

NRT : Summer 2010 ‐ the airport capacity increases from 200 thousand flights/year to 220 thousand flights/year.HND : 2010 Oct. ‐ 4th runway will start operation.

“Big Bang” of Aviation Policy toward 2010 – Asia Gateway Initiatives

NRT to strengthen its international air network.HND to promote international air services2010 onwards : International air services can use 30 thou. flights / year for both “daytime” and “midnight and early morning”.‐‐‐ “daytime” for near Asia routes and “midnight and early morning” for world major cities including Europe and US.

2009 AgreementLiberalized rotues, number of flights and number of airlines.Free codesharing.Simplified fare approval system.

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Effects of Open Skies

Code Share Alliances, ATI and JVs

Increased Traffic

Reduced Fares and Air Transport Costs

Increased Economic/Job Growth

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Transatlantic Markets, Changes in Average Fare, 1998 vs. 1996

10Source: US DOT, International Aviation Developments: Global Deregulation Takes Off (First Report) (December 1999).


Benefits of Open Skies:Asian Case

Malaysia‐Thailand MarketOriginal 1969 Bermuda Bilateral liberalized over years.

Increased services, frequencies and overall traffic between 2 countries.

As of 2005, 1.3 million passengers traveled between the 2 countries.

370,000 due to liberalization and entry of LCCs like AirAsia.

Liberalization expanded market by 37%, creating for each country more than 4,300 full‐time jobs and a stimulus to GDP of over US$114 million.

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Benefits of Open Skies:Asian Case

Shingapore – Kuala Lumpur Market

Liberalization in Dec. 2008

LCC entered into the market and the flight fare was reduced drastically ‐‐‐ from 400S$ to 100S$.

The number of tourists increased 34% in 2009.

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To open up Japanese sky to the world, to Asia.To promote open skies policy strategically with a priority on Asian countries in order to realize tourism‐oriented nation and to introduce new comers such as LCCs.

To enhance consumers’ benefits through promotion of LCC.To strengthen the system to accept inbound tourists from Asian nations ‐‐‐ eg. To develop LCC terminal in the major airports.


The seminar starts NOW.

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Documents

and Effects of Open Skies Policy