The ASEAN-EU Comprehensive Air Transport Agreement: Investigating The Possible Implications on Competitive Dynamics Involving ASEAN and EU Carriers

Bin Mohamed Anuar, Muhammad Danish Danial, Itani, Nadine, O'Connell, Frankie and Warnock-Smith, David (2023) The ASEAN-EU Comprehensive Air Transport Agreement: Investigating The Possible Implications on Competitive Dynamics Involving ASEAN and EU Carriers.

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The Association of Southeast Asian Nations (ASEAN) and the European Union (EU) signed the Comprehensive Air Transport Agreement (CATA) between their member states in October 2022. The ASEAN-EU CATA is the world’s first bloc-to-bloc air transport agreement and reflects the latest policy thinking in air transport regulation. The agreement allows the carriers of the two blocs to operate passenger and cargo services between and beyond both regions, by exercising Fifth Freedom traffic rights and liberalising codeshare restrictions. Since 2014 and despite that both sides showing a commitment to elevating their aviation relations to a new level, the two regions remain different regarding the level of ‘internal market’ integration and liberalisation of the aviation sector. These intrinsic variations contribute to creating disadvantages in the competitive position of ASEAN-based carriers when compared to their EU counterparts. This study aims to investigate the possible implications of the CATA on the airlines’ competitive dynamics by applying William’s (2007) Competitive Dynamics Model to analyse the interactions in the strategies, responses, and implications on the performance of airlines in both markets. A series of quantitative indicators using secondary data are utilised to examine selected ASEAN and EU carriers’ awareness, motivation, and ability to respond to the novel changes in the industry’s regulatory and competitive environments. While the findings indicate the strategic response of both ASEAN and EU carriers to be focussed on interline agreements and joint ventures, competitive rivalry is likely to remain intense for popular destinations such as Thailand and Singapore. Additionally, the study uncovers the advantages in the scheduled frequencies and fares of the big three Middle Eastern carriers and Turkish Airlines, over home airlines in major ASEAN and EU hubs. The CATA-induced partially liberalised market will drive more partnerships among ASEAN and EU carriers to align schedules in their respective hubs as a response to competition posed by Middle Eastern carriers. The findings suggest that airlines’ possible actions and reactions to one another are precursors to driving changes in market structure over time within the new ASEAN-EU CATA framework.

Item Type: Article
Keywords: Aviation Law, Liberalisation, Open Skies, Airline Competitive Dynamics, ASEANEU CATA
Depositing User: RED Unit Admin
Date Deposited: 23 Oct 2023 12:06
Last Modified: 23 Oct 2023 12:06

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