State Aid For Pioneer Routes Under Public Service Essay

Question:

Discuss about the State Aid for Pioneer Routes Under Public Service.

Answer:

History and development

The ASEAN was established in August 1967, with the major aim to accelerate the economy, improve the cultural growth and work on social progress. The focus has been on the promotion of the regional space and stability which abides to respect for justice and rule of law in the relationship. In the beginning, they were balancing the political conflicts between Malaysia, Indonesia, and the Philippines where concern was about the decolonization and state-building process. (Fox & Ismail, 2016) With changing time, there has been basis set for political sensitive questions upon relations with neighboring countries with aim of economic cooperation. With 20 years of the crisis in finance of 1998, ASEAN members have been challenging the world related to the growth of the civil sector with the airlines like Air Asia, Lion Air, Viet Jet. There are different companies involved to have a long-term of air connectivity, with regions expecting liberalization of the lower fare, and focusing on liberalizing air travel between its member states. With development, ASEAN faces the dilemma of foreign policy which triggers a revision of consensus & acceptance of different opinions rather than paralyzing the community. Apart from diversity in different regions mainly Southeast Asia, there are connecting characteristics which are in young generation in urban centers who are connected through smartphones and planes (Nurhendiarni, Hidayat & Pasasa, 2015). One of the common factors which could be seen is the state repression where example of Malaysian British Movement could be analyzed which reflects upon the creation of strong political reaction, wherein civil society has not been able to manage and connect through.

Details the outcome of that system on the countries involved.

The countries involved with ASEAN are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.

Any problems faced by the countries involved

It has been seen that the increased competition is the major concern for Indonesian airlines after the implementation of ASEAN Open Skies Policy. Indonesia is one of the largest aviation market wherein Malaysia and Singapore is eager to open the routes where issues like the government tax policies, inefficiencies and the lack of human resources like the controller for the air traffic, technical etc (Cline, 2016). The other problem with Indonesian Transportation Ministry had issues with the larger number of airports.

There is still a mistrust between the people when it comes to the integrity on a border. The unrests in different countries of the group where there are separatists' rebels in Philippines and Thailand is having certain political unrest. The differences in the governments and some countries are developing faster than the other is a major concern. It is seen that Singapore, Thailand, Malaysia, and Indonesia are comparatively stronger. The countries are easy to be inferred in comparison to the EU Open Skies independent system of control. As per the research, terrorism, South China Sea dispute and the climate change with sea level rising has a major impact on the relation between ASEAN countries (Nugraha, 2015).

How the system affected

Airline Competition

With the liberalization of the aviation market which is expected to have a major boost of the frequency of flight, the enhanced connectivity, it is important to encourage a higher service quality with lowered pricing for the air passengers. This is mainly due to the increased competition. With this free movement of labor, liberalization tends to open with unfettered competition that allows the expansion of the national carriers. The Open Skies tend to remove policy restrictions by lifting them to allow free transport of people and cargo. This encouraged the competition to drive down the prices of tickets and then open a door for the airlines to be one of the regional players in the industry (Tan, 2015). Some of ASEAN members are also reluctant to be liberalized mainly due to the issue of the domestic airlines when they do not want to compete in an open market. Another highlight is about the infrastructural inadequacy with limiting ASEAN based airlines from expansion. To compete and develop a consolidated airline, one needs to establish a larger regional company which can compete beyond any South East Asia company to reach the regional integration and global competitiveness.

Local Economies

ASEAN Open Skies need to focus on the characterized free movement of goods and services, investment, and skilled labor by focusing on liberalizing the air transport with economic development. This will help in improving the economic growth in the tourism sector with transport linkage for better movement of the trading and services. According to the report, ASEAN Economic Community is mainly to spur the cross-border movement of research with greater specialization to strengthen and broaden cooperation in science and technology. The leaders have acknowledged hinging the member states to manage and assimilate science and technology (Briefing, 2015). For the local economies, the major issue is related to strong multi-national presence to draw the knowledge related to embedding large foreign firms to develop a level of professionalism. The economic integration does not focus on overall growth but seems to deliver better jobs and benefits to the society (Critea, Hillberry & Mattoo, 2015). The ASEAN leaders also have made sure about dividends of economic integration which are distributed in an equitable manner.

Consumers

ASEAN is considered to be "people-focused" where the main consumers can look forward to a better and a free market pricing mainly in the industry of airlines. The policies are found to be cheaper for people for more airline choices which could be set with a healthy and competitive environment (Menon & Melendez, 2017). The major benefit for Indonesia comes from the Open Skies which focus on success about Indonesian carriers and airports that tend to dominate mainly their market. The consumers are mainly going to get a better benefit in the long run from better pricing with healthy and free market competition.

References

Briefing, A. S. E. A. N. (2015). ASEAN open skies policy to be implemented in 2015.

Cline, H. E. (2016). Hijacking Open Skies: The Line Between Tough Competition And Unfair Advantage In The International Aviation Market. J. Air L. & Com., 81, 529.

Cristea, A. D., Hillberry, R., & Mattoo, A. (2015). Open skies over the Middle East. The World Economy, 38(11), 1650-1681.

Fox, S. J., & Ismail, R. (2016). ASEAN Open Skies–Aviation Development in 2015: Blue or cloudy skies?. Annals of Air & Space Law, 40, 607-654.

Menon, J., & Melendez, A. C. (2017). Realizing An Asean Economic Community: Progress And Remaining Challenge. The Singapore Economic Review, 62(03), 681-702.

Nugraha, R. A. (2015). State Aid for Pioneer Routes Under Public Service Obligation in Indonesia: Against the Tide Within ASEAN Open Skies? (Doctoral dissertation).

Nurhendiarni, S., Hidayat, N. K., & Pasasa, L. (2015). The Effect of Asean Open Skies Policy 2015 upon Opportunities for Low-Cost Carriers in Indonesia-a Case Study of Pt. citilink. The South East Asian Journal of Management, 9(1), 34.

Tan, A. K. J. (2015). The proposed EU-ASEAN comprehensive air transport agreement: What might it contain and can it work?. Transport Policy, 43, 76-84.

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