EU-Asean open skies agreement can reverse negative travel trends

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KUCHING: The proposed European Union-Association of Southeast Asian Nations (EU-Asean) open skies agreement  is likely to significantly boost air links between Asia and Europe, reversing some recent negative trends in travel, as well as pave way for Southeast Asia’s biggest carriers to launch new services to Europe’s secondary cities, says Flightglobal in a recent analysis report.

It highlighted: “FlightMaps Analytics data shows that currently most of the capacity between Asia and Europe flows between the major hub cities – Singapore, Kuala Lumpur and Bangkok to London, Frankfurt and Amsterdam.

“There are only a few secondary cities that have direct services to Southeast Asia – Manchester, Munich, Milan and Barcelona.”

Last year alone, it said that the number of seats offered continued to decline with 6.92 million seats between Asean and the EU, which was slightly less than the seven million average during the years of the global financial crisis.

At the same time, the number of departures is up to a high of just over 23,000, with the average number of seats per flight declining from 343 in 2005 to 338, it said.

“While that decline is not much, it does demonstrate that the market between Southeast Asia and Europe, although cyclically weak, may be poised to fragment into smaller markets between multiple city pairs,” it added.

Flightglobal noted that Singapore Airlines and Thai Airways account for the largest number of seats between the two blocs, and both carriers rely on European partners such as Lufthansa to connect passengers onto other cities from their hubs.

It said that while this scenario may have been fine in the past, but those carriers are now at a disadvantage compared to the Gulf carriers, such as Emirates Etihad and Qatar Airways, as well as Turkish Airlines.

“By virtue of the position of their hubs, those carriers have great access into secondary markets in Europe, and they can efficiently connect passengers from Southeast Asia with only one stop,” it explained.

As such, it pointed out that for Asian carriers like SIA, Thai and Malaysian Airline System Bhd (MAS), open skies would allow them to also add more pairs to secondary cities, reducing their relative disadvantages.

“Those carriers and others have already planned their fleets accordingly, with most set to receive new generation widebody aircraft that could easily be pointed to less dense city pairs, while still having the range to reach them.

“SIA in particular has invested heavily in the Airbus A350-900, with 70 on order of which a large amount are likely to find their way flying to cities in Europe that would not support the larger Boeing 777-300ERs or A380s.

“Vietnam Airlines and Thai also have orders for 787s and A350s that could open up new services to the likes of Birmingham, Dusseldorf or Marseille,” it said.

Flightglobal, however, cautioned that while the open skies agreement could help boost air travel between the two regions, the economic situation in Europe is still vital in terms of sustainability.

“It’s no secret that the Asian carriers have suffered over the past few years from their exposure to the sluggish European market.

“But with open skies likely to take some years to negotiate and gain approval, the situation may have improved by the time it is implemented.

“With all those factors considered, there can be no doubting that Southeast Asia’s carriers are well placed for open skies with Europe,” it concluded.