Trade Facilitation and Regional Cooperation in Asia

Trade Facilitation and Regional Cooperation in Asia

ADBI series on Asian Economic Integration and Cooperation

Edited by Douglas H. Brooks and Susan F. Stone

This insightful book collects empirical analyses and case studies to clarify issues and draw policy recommendations for facilitating greater regional trade through increased cooperation.

Chapter 2: ASEAN Open Skies and the Implications for Airport Development Strategy in Malaysia

Tham Siew Yean

Subjects: asian studies, asian economics, asian urban and regional studies, economics and finance, asian economics, regional economics, urban and regional studies, regional studies


Tham Siew Yean INTRODUCTION 2.1 ‘Open skies’, in general, refers to the liberalization of aviation markets that can be pursued on a bilateral, regional, or multilateral basis. However, the depth of liberalization may differ from one open sky agreement to another as these agreements enhance the competition between airlines in different degrees. Capacity deregulation and the removal of price controls may also be treated differently in different agreements. Moreover, the geographic and functional dimensions covered may also differ from one agreement to another (Forsyth et al. 2004). In the case of the Association of South East Asian Nations (ASEAN), with the progressive implementation of the various ASEAN open skies agreements, it is envisaged that air traffic between member countries will be progressively liberalized by 2015. Ultimately, ASEAN seeks to build a unified aviation sector by 2015, whereby designated airlines from a member country in ASEAN will be able operate unrestricted flights to the designated airports of other member countries. For ASEAN countries, increasing competition from the People’s Republic of China and India has created a new impetus to enhance their competitiveness, including a renewed effort to improve their transportation and logistics support services, for several reasons. First, the declining importance of tariffs has increased the importance of other types of trade transactions costs. In particular, the rise of global and regional production networks and the increasing use of just-in-time logistics, intermodal transport and new security considerations since 9/11 have changed the face of the international economy and, with it, the...

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