Open Sky Policy Research Articles

Efficiency in Thailand’s air transport industry in the era of air liberalisation policies

Air liberalisation and open skies policies have benefited countries by generating economic growth. However, as the sky has become overcrowded, the increasing competition has pressured airlines to control costs in order to maintain profitability. Efficient use of resources is an important topic for the airlines. Thailand’s air transport industry is unique compared with that in its neighbouring countries. The number of low cost airlines operating in the country has made Thailand a major aviation hub in the region. The developments and changes in Thailand’s air transport industry have raised questions as to whether these have brought any significant changes to airline productivity and efficiency. This study adopted the data envelopment analysis model to examine the efficiency of five airlines in Thailand for the nine years from 2011 to 2019. The airlines, of various fleet sizes, pattern of ownership and business models were examined. The study investigated both the technical and scale efficiency of the airlines and concluded that budget airlines are not necessarily more efficient than full service carriers, private airlines are more efficient than state-owned airlines, and small to medium size airlines are more efficient than large airlines.

Open Skies Policy: The Developing Countries Point of View

The concept of open skies policy is an international policy concept which aims to liberalize of rules and regulations on international commercial aviation industry. For developed countries, by allowing air carriers unlimited market access to its partners’ markets and the right to fly to all intermediate and beyond points, open skies agreements provide maximum operational flexibility for airline alliances. They may have the best opportunities, as they will be able and in the best position to offer the best product to the better part of the air traffic market. On the contrary, for developing countries, open skies policy may cause more harm to the interests of airlines than bring economic gains to the countries. Further, it will lead to a domination of the international air transportation market by the biggest and most developed countries that finally it will return the situation to monopolistic system. To take care of emerging needs, it would be more appropriate to periodically renegotiate the existing bilateral agreements.

OPEN SKY POLICY DAN STRATEGI PEMANFAATAN RUANG UDARA INDONESIA

The Asean open sky policy will have logical consequences on the regulation, control and utilization of Indonesian air space, therefore a strategic regulation, control and utilization strategy is needed to maintain the national interests of the Indonesian state as a whole.This paper uses doctrinal research methods through literature study, while the data analysis uses qualitative methods. The results of this research study indicate that the government must improve and make improvements to infrastructure on national aviation in terms of capacity, systems and technology, as well as strengthening existing policies and regulations so as to maximize the use and utilization of the potential of the air space.

Geopolitics and the ASEAN single aviation market: Aspirations versus realities

This paper aims to explore and identify the key geopolitical barriers and opportunities to greater regional integration amongst the Association of Southeast Asian Nations (ASEAN) member states by examining the case study of the ASEAN single aviation market (ASAM). This paper is based on an ongoing doctoral research project covering the topic. To date, ASEAN has implemented substantial liberalisation of its regional air transport market via an open skies policy, included as part of the ASEAN Community Project. This aims to not just foster connectivity and economic development, but ultimately to contribute to the building of a regional identity. While there has been some evident progress since the launch of the initiative in the region, the open skies agreement promoted as ASAM has not gained as much traction as projected, nor achieved its core stated aim of creating an effective single air transport market; a stated goal it initially planned to achieve by the end of 2015. Most of the literature explaining the divergence between key aspirations and realities in ASAM focuses on the economic regulation of international air transport in the region, and typically discusses these core considerations from the perspectives of law and policy. There are few substantial scholarly works that incorporate geopolitics, aeropolitics and/or diplomacy, all of which are important variables closely linked to the field of international relations. The geopolitical perspective on ASAM is still largely understudied, and this paper and the evolving research underpinning it, are intended to contribute to that identified gap.

Urgensi Penerapan Interdependent Airspace Governance Untuk Optimalisasi Tata Kelola Ruang Udara Nasional Sebagai Antisipasi Open Sky Policy

Indonesia as an archipelago state has a national airspace of 5,180,053 km². Indonesia's airspace is located in a strategic position between the continents of Asia and Australia which makes Indonesia one of the busiest air routes in the world. Therefore, the management of air space is a vital matter that must be emphasized through various legal instruments. The sovereignty of Indonesian air space is affirmed in Article 49 paragraph (2) of the 1982 International Law of the Sea Convention which was ratified by Law Number 17 of 1985 concerning Ratification of the United Nations Convention on the Law of the Sea. This article explicitly regulates the legal status of archipelagic waters, air space over archipelagic waters and the seabed as well as the land below. So far, territorial sovereignty that is complete and exclusive is regulated in Law Number 1 of 2009 concerning Aviation, but it does not specifically regulate the boundaries of Indonesia's sovereign air space, either vertically or horizontally. The national airspace of a country is completely closed to foreign aircraft, both civilian and military, so it must be with the permission of the underworld, either through bilateral agreements or multilateral agreements, so that a country's national air space can be traversed by foreign aircraft. Such closed nature can be understood considering that air space is a very vulnerable medium of movement when viewed from the point of view of under-state defense and security. Attacks using aircraft have many advantages and conveniences that can exploit the vulnerability of an air space, such as its fast (speed), wide range, surprise, optimal penetration. This is what prompts each country to adopt its national airspace protection standards which are strict and rigid. Flights between countries are fully regulated through the Bilateral Air Transport Agreement (BATA). Without BATA, the state cannot provide air transportation services to a country. BATA itself is a form of implementation of state sovereignty in air space that is complete and exclusive in the midst of globalization challenges, such as aviation liberalization (Open Sky Policy). Referring to the Open Sky Policy, this policy allows air carriers to make decisions on routes, capacities, prices and various options for flight activities.

Pro dan Kontra Penerapan ASEAN Open Sky bagi Negara Anggota ASEAN

Flight liberalization in South East Asia Region has long been initated and implemented since 2015 under the name of ASEAN Open Sky Policy. The implementation of this policy which is aimed to give a full access to the flight companies in ASEAN countries triggers a debate. There are pros and cons about it. Through this research, the writer intends to analyse cost and benefit of the implementation of that policy to the ASEAN countries. The focus of the analysis is on the impact of ASEAN Open Sky Policy to the countries in the region where the policy contributes to the ASEAN Economic Community. This research uses liberal institutional approach. The method is literature studi. Data processing technique uses single SWOT analytic concept. The result shows that the effect of ASEAN Open Sky is more beneficial to Singapore and Malaysia rather than to Indonesia and the Philippines.

Applications of gravity models to evaluate and forecast US international air freight markets post-GFC

In addition to being the world's largest economy, the United States (US) has been the foremost driver of consumer spending, free trade and open skies policies. Trade-driven economic growth and air freight markets have been commonly linked in air transport research. Despite increased security after the 9/11 terrorist attacks, international air imports to the US has continued to grow at a rate faster than consumer spending.This paper aims to evaluate whether gravity models are robust enough to forecast and accurately account for substantial economic shocks such as the Global Financial Crisis (GFC). Our research suggests that US demand for air freight is highly sensitive to transport costs, competition from sea freight and consumer spending patterns of perishable, low value and high value commodities across the 19 commodity groups examined, rather than manufacturing income or factors associated with product origin, which is all the more interesting in the context of the recent protectionist rhetoric of the US administration.

Political Economy of ASEAN Open Skies Policy: Business Preferences, Competition and Commitment to Economic Integration

Despite significant growth of the domestic airline industry, Indonesia was hesitant to ratify the ASEAN Open Skies Policy (OSP) until 2016. One of the recent findings exposed the increasing concern over foreign–domestic airline competition with too little attention in exploring airline aspirations and the potential interplay between the airline preferences and the state interest. This study empirically investigates the dynamics of domestic resistance to the implementation of OSP, and to what extent the interplay of Indonesian airlines’ business preferences, ASEAN contexts and state interests have contributed to the OSP ratification postponement. Taking some lessons from the OSP ratification, we argue that the efforts towards advancing ASEAN economic integration through the open skies are contested domestically when business preferences showed mixed reactions. There has been little agreement on how the OSP could benefit the domestic airlines following their own business strategy. In the meantime, state principles indicated certain priorities for domestic interests, while ASEAN contexts allowed a member state to practice a negotiated move. The study was conducted using a qualitative method, with semi-structured interviews involving three Indonesian airlines (state and privately owned, full service and budget airlines), government officials, a civil society element and the Indonesian national air carriers association. JEL Classification: F0, F5

Lotniska komunikacyjne w Polsce po 1918 roku

Communication airports in Poland after 1918 The history of communication airports coincides with the century-long existence of the reborn Polish State, because it was only after 1918 that the first airports adapted to passenger traffic were established in the country. Two periods of their development deserve particular attention: the interwar period, in which the communication aviation was born, and the time after 2004, when its rapid expansion was noted. The establishment and development of the communication aviation of the Second Polish Republic was strongly associated with the statist policy aimed at modernizing the state. This is evidenced by the construction of airports in Warsaw, Gdynia, Katowice, Łódź and Vilnius, whose activities have helped to integrate the country after the years of partitions. In People’s Poland, civilian communication was based on a network of military airports, which was supplemented with a new airport in Gdańsk-Rębiechów. Large areas of the north-eastern voivodeships were excluded from air connections and timid attempts to overcome these disproportions only appeared in the Third Republic of Poland in the form of airports in Lublin and Radom. The fourfold increase in the number of passengers served by Polish airports in 2004–2016 was an unquestionable phenomenon influenced by the Open Sky policy.

Challenges and Opportunities of the Establishment ASEAN Open Skies Policy

Open skies policy is a concept of free market of airline industry. It eliminates single government’s influence in regulation and management of aviation industry. As implemented by the ASEAN Single Aviation Market (ASEAN-SAM) per 2015, the open skies policy aims to increase regional connectivity and regional economic growth by permitting airline industries from each ASEAN member states to fly above the Southeast Asian region without any barriers or restrictions. This policy has raised pros and cons from each ASEAN member state. Indonesia and some other states are still reluctant to adopt the open skies policy. By entering into commercial agreement to open their airspace, each member states will challenge their state sovereignty over the airspace above a state’s territory. This study argues that regional open skies policy provides greater economic advantages for the consumers of airline industry. However, this policy does not parallel to the basic principles of ASEAN. State sovereignty must be preserved in the liberalization that open skies represents. ASEAN Way, though inflexible, assigns member states with full sovereignty, which does not limit open skies policy implementation. This study, then, proposed legal framework through model of regional agreement to compromise between the state sovereignty principles and the regional open skies policy.

INDONESIA’S AIR SOVEREIGNTY ISSUES IN THE GLOBAL ERA

A state has a government as the supreme authority that has a complete and exclusive jurisdiction over its territory. It is very important to Indonesia, with its vast territory, to preserve and uphold the state’s sovereignty, particularly over its airspace. Especially in this global era, when the rapid development of technologies resulting in the end of geography era, and the world seems to be borderless. The issue discussed in this paper is Indonesia’s air sovereignty issues in the global era. The things to be concerned by the Government of Indonesia on the management and protection of the state’s sovereignty over the airspace in the global era are: (1) the take over of the Flight Information Region above Riau and Natuna from Singapore FIR; (2) the prevention and suppression of airspace violation incidents; and (3) the impact of Indonesia’s ratification on the ASEAN Open Skies Policy to the protection of the sovereignty over Indonesia’s airspace. A state’s airspace is very strategic because it is the first fortress of a state, in which all foreign forces can fly in first. Therefore as a state with vast territory, the Government of Indonesia must work hard to be able to preserve and uphold the sovereignty over its territory, especially in defending the state’s sovereignty over its airspace in the global era.

THE IMPACT OF LIBERALIZATION OF ASEAN AIR TRANSPORTATION ON INDONESIAN AIRLINES

Liberalisation of air transportation practically is known as open sky policy. In the practice, the liberalisation of air transportation is divided into two group of services, i.e.: air transportation services, for passengers and goods (air service) which is categorized as hard rights and supporting services of the air transportation services (ancillary services) which is categorized as soft rights. The research in this paper focused in air transportation services for passengers and goods, consists of nine freedom of the air. The impact of the policy such as the Agreement regarding ASEAN open sky policy, is the readiness of Indonesian air transportation companies to compete with foreign air transportation companies. The government of Indonesia has to regulate the implementation of ASEAN Open Sky Policy to be projected in order to comply with national development, i.e. the function of air law in national development. The policy has been implemented by enact or amend the existing law as air law that regulate flight lines, the following provisions: To regulate flight line for foreign airlines to open flight lines in Indonesia region which may not or have not land and sea transportation. The regulation is intended to support mobility of humans, goods and services that may fulfil the needs of the people of Indonesia, which materially and spiritually and the development of the region. The regulation of flight lines of foreign air transportation for region of tourism, industrial and trade center. The regulation is intended to support the national economic development of Indonesia.

KEBIJAKAN PENETAPAN RUTE PENERBANGAN PADA ERA ASEAN OPEN SKY

The objective of this research is to analyze the evaluation of flight route policies, through program effectiveness, program adequacy, program distribution program that is enjoyed by all the aviation stakeholder and responsiveness and to recommend design improvement (roadmap) on flight route policies in accordance to the ASEAN Open Sky policy for the national carriers to be competitive. Research methods used are qualitative description with USG (Urgency, Seriousness, Growth) approach or Issue Priority Matrix, investigation result on the flight path policies evaluation. The research used purposive sampling technique to determine the informant. The study result provides an overview of the preparation of improvement actions based on program evaluation through the establishment of medium term roadmap which consists; a) Grand Design disposition that regulate Indonesian airspace as state asset that has strategic value, b) Development of route connectivity functions, where national carrier must develop Global Distribution System functions. These GDS functions must be enhanced to provide support for assisting the airlines distribution process, simplifying airlines ticket booking, and minimalizing investment cost. c) Assessment of all Civil Aviation Safety Regulation (CASR) associated with Air Traffic Management (ATM), as well as d) developing e-business functionality that provides support for services.

THE LEGAL ANALYSIS OF “TEORI KEDAULATAN NUSANTARA” TOWARDS THE NEW CONCEPTION OF INDONESIA AIRSPACE SOVEREIGNTY

Art. 1 Chicago Convention of 1944 confirms that every state has a complete and exclusive sovereignty over the airspace above its territory. This arrangement gives the highest role of state in controlling air transportation based on state sovereignty principles. The concept of airspace sovereignty faced challenges with the introduction of International air transportation liberalization through deregulation provisions. Such liberalization policy is later known as ‘open sky policy'. Such open sky policy includes the establishment of single market such as Single European Sky dan ASEAN Single Aviation Market. The liberalization led to a situation where sovereignty concept has been regarded from a different perspective. It is widely argued that the smooth operation of new forms of International cooperation requires a more flexible perception of sovereignty. This study wants to analyze the concept of Indonesia airspace sovereignty. A theory of Indonesia airspace sovereignty that ever born is the Teori Kedaulatan Nusantara by Priyatna Abdurrasyid in the 1970s. Teori Kedaulatan Nusantara based on two doctrines i.e. the doctrine of necessity and doctrine of right of self-preservation that is the core of military/security aspect. In the other hand, what has become clear in the last few decades is that the economic aspects of airspace sovereignty have dominated change. This paper argues that there is a continuing trend away from the absolute airspace sovereignty regime towards something less. It is submitted that preservation theory cannot be sustained in the Indonesia airspace sovereignty doctrine. This paper asserts that the new paradigm of International air transport drives Indonesia towards the release of some aspects of Indonesia's airspace sovereignty doctrine.

LEGAL POLICY OF INDONESIA’S AIR TRANSPORTATIONS HUMAN RESOURCES DEVELOPMENT IN FACING ASEAN ECONOMIC SOCIETY 2015

Legal policy of development and the provision of law flight human resources belong to national transportation policy subs-system. Legal policy contained in Act No. 7 of 2007 about RPJP puts the development of air transportation as one of the parts of the national facilities and infrastructure development. In the regime of flight law, human resources management is arranged in separated sections that belong to the national system development. The scope of human resources development and setting provision are as follow, human resources planning (manpower planning), education and training, expansion of employment opportunities, as well as surveillance, monitoring, and evaluation. The politic of legislated development setting and the provision of human resources that are made through delegated legislation above require further policy in form of three ministerial regulations as follow, ministerial regulation of the human resources provision and development in flight field, ministerial regulation of education and training in flight training, and ministerial regulation of competency certificate, licensee and training program.The writer advices the transportation ministry to realize in short time those three ministerial regulations which already have basic delegated delegation as the solution to face ASEAN open sky policy.

Development Policy of Warsaw Chopin Airport in the Light of the European Funds for 2014–2020

In 2014, Poland celebrated the 10th anniversary of the access to the European Union. At present, air traffic has been increasing since 2004, when the open sky policy was introduced. Unfortunately, the dynamics of year to year growth is getting lower. In 2014 Polish airports operated more than 25 million passengers. Polish Civil Aviation Authority forecasts the growth of air traffic by 2020. It is possible to predict that in 2020 in Poland 38 over million passengers will be traveling by plane. The flight operations and the rate of population mobility will increase. Polish government as well as local authorities and regions have to prepare a strategy of air transport development. This strategy should be realized for the central airport in Warsaw, major regional airports, small regional airports, and local and business aviation. The main aim of this paper is to identify opportunities for Polish airports in the new perspective of European funds for 2014–2020. The main problems of the issue will be presented from various points of view. The first problem focuses on the development of Polish air transport area. Moreover, the paper concentrates on the availability of European funds for air transport. Finally, the paper presents the analysis of selected investments in air transport area: infrastructure, capital and operations. These investments and regional strategies as well as individual programs and the concept of Central airports for Poland will be determining the model of the Polish air transport system until 2020.In the paper, I conducted the detailed research about the development with the management of Warsaw Chopin Airport.

THE EFFECT OF ASEAN OPEN SKIES POLICY 2015 UPON OPPORTUNITIES FOR LOW-COST CARRIERS IN INDONESIA – A CASE STUDY OF PT.CITILINK

The ASEAN Open Skies agreement is included in the ASEAN Economic Community’s blueprint and will be implemented in 2015. This study is intended to assist Citilink - an Indonesian low-cost carrier airline - in measuring its level of awareness and analyzing its SWOT towards the ASEAN Open Skies Policy 2015. This descriptive study utilizes quantitative and qualitative approaches and collected data from both primary and secondary sources. Questionnaires were distributed to Citilink Staff and analyzed using IBM SPSS and SPSS Amos. The awareness level of Citilink staff towards the ASEAN Open Skies Policy turned out to be high and the knowledge factor significantly influenced the awareness level. The study identified both benefits and drawbacks to the implementation of the ASEAN Open Skies Policy; however, Citilink already holds a good position as an Indonesian low-cost carrier and must pursue an aggressive strategy to maximize opportunities so that it can compete successfully at the regional level.

Aeropolitics and Open Skies

In 1944, in Northwest Airlines, Inc. v. Minnesota, a case of first impression about the constitutional limitations upon state power to tax airplanes, Justice Robert H. Jackson wrote in a concurring opinion that, “[p]lanes do not wander about in the sky like vagrant clouds.” Rather, “[t]hey move only by federal permission, subject to federal inspection, in the hands of federally certified personnel and under an intricate system of federal commands.” Indeed, the “moment a ship taxies onto a runway it is caught up in an elaborate and detailed system of controls. It takes off only by instruction from the control tower, it travels on prescribed beams, it may be diverted from its intended landing, and it obeys signals and orders. Its privileges, rights, and protection, so far as transit is concerned, it owes to the Federal Government alone and not to any state government.” Concerns about how to design and manage the airways in the sky was not a concern for American jurists and lawmakers alone, but an international issue in the post-war 1940s.The international aviation community came together on safety issues, but stipulations respecting economic issues — such as protocols allowing foreign airlines to fly wherever they wanted in the other’s territory, as frequently as they desired, and at prices they chose — were elusive. In place of a comprehensive arrangement for international airline operations, therefore, bilateral and multilateral agreements facilitated commercial air travel. But, then, deregulatory impulses eroded protectionist philosophies in the late 1980s and early 1990s as the United States and Europe and other nations and regions pursued “open skies” policies that liberalized wide swaths of international travel. While not entirely free to wander about the sky uncontrolled, airliners could go to more destinations, more regularly, and less expensively.This article overviews the seminal issues of open sky policy, including antique laws of ownership and control. Also presented is a review of airline deregulation policy in the United States, argument in favor of the expansion of so-called cabotage rights allowing foreign carriers to fly domestic routes, and discussion of the emergence of strategic airline alliances. Finally, this article concludes with coverage of an intense controversy between major U.S. airlines, on the one hand, and Persian Gulf carriers, on the other hand, that risks open skies policies in the Middle East. In presenting these issues, this article aims to introduce the reader to the unusual and historically significant ways in which aviation laws are derived domestically and internationally, and in doing so, raise a general question about the welfare of aviation consumers overall. In conclusion, this article criticizes U.S. carriers seeking to reverse hard-won open skies policies. Indeed, the U.S. airline’s industry’s habit of looking to the government to get out of the way except when it comes to their own welfare is inconsistent with principles of free competition, avoids the real market-borne issue of product competition, and is hollow when asserted by carriers who have received substantial protections under U.S. bankruptcy law to survive in a global sector that should be performance — and not subsidy-based.

허브경쟁력 강화를 위한 해외 저가항공사 터미널(LCCT) 활용 사례연구

Low Cost Carrier(LCC)s in Asia.Pacific market are expected to record high growth due to the expansion of Open Sky Policy among Korea, Japan, China and South East Asia. As everybody is aware of, LCC is not only saving flight cost but also creates differentiating business model by reducing unnecessary services such as F&B and in-flight duty free sales services. Booming LCCs in Asian market will cause not only Incheon airport but also other local airports in Korea to compete heavily to attract LCCs. For example, Air Asia Group with more than 200 fleet has expanded its alliance network throughout Asia. Therefore this paper has researched a new business model operating a LCC terminal for the hub airport competitiveness. According to analysis result of case study, it was found out, considering increasing airline demand next decade, Incheon airport and other domestic airports in Korea had better change an existing terminal into a LCC Terminal(LCCT) to differentiate airport services and expand its hub network. That is because of economic feasibility, first of all, of securing hub and spoke networking capabilities with airlines and finally of developing commercial facilities customizing LCC passengers' demand.

The Low Cost Airline Consumer Price Sensitivity: An Investigation on the Mediating Role of Promotion and Trust in Brand

The ASEAN Open Sky Policy is one of ASEAN policy to open the airs-pace between the ASEAN member countries. Aviation services based companies including the Low Cost airlines will experience tight com-petition among ASEAN airline companies. This research aim to explore the effect of price on customer loyalty through the mediating role of promotion and trust in brand. The original sample collected from 100 Indonesian low-cost airline Citilink consumer that just arrived in Soekarno-Hatta International Airport, the bootstrapped techniques conducted for 500 sub-samples and further analyzed with structural equation modelling partial least square. The research findings support the low cost airline consumer price sensitivity, furthermore price affect the trust in brand more severe compared with the promotion. Price effect fully mediated through the trust in brand and promotion toward the consumer loyalty. Further research should consider the sensitivity of price to elaborate the decision making process for the low cost airline consumer. DOI : https://doi.org/10.21632/irjbs.7.3.199-211 Keywords: Price Sensitivity, Promotion, Trust in Brand, Low Cost Airline, Loyalty