Measuring the impact of ASEAN Open Skies on international air traffic movements from and to Southeast Asian Cities

Abstract

We study the effects of the Open Skies Agreement (OSA) of the Association of Southeast Asian Nations (ASEAN). This treaty was meant to promote competition among member-state carriers, leading to an increase in the volume of passengers. In this study, we estimate the impact of the OSA on the number of international air passengers and on the number of operating airlines; moreover, we disaggregate these effects into effects on low-cost carriers (LCCs) and full-service carriers (FSCs). Using data from the Official Airline Guide, we estimate the impact of the OSA by three methods: fixed effects, difference-in-differences with propensity score matching, and distance matching. Our results show that OSA has boosted the recent surge of all LCCs and FSCs to and from the ASEAN region. However, the OSA has decreased the number of FSC flights within the region, with a resulting negative net effect on the number of airlines.