After nearly 20 years, the UK and Singapore have signed a landmark Open Skies deal
Nearly two decades after Singapore began pressing the UK for a liberal air services agreement, it finally got what it wished for - and much more.
A landmark deal that removes all restrictions on flights between the two countries, in addition to allowing Singaporean carriers to operate beyond the UK as well as within the UK, was announced in early October. Singapore's Ministry of Transport says the "unrestricted Open Skies agreement" is the first of its kind for the UK, and is Singapore's second after one with the UAE. It was negotiated nearly 20 years after Singapore began seeking a liberal new air services accord.
"This groundbreaking agreement is even more liberal than conventional OSAs, as it provides for unlimited hubbing and cabotage rights for carriers of both countries," says Singapore's Transport Ministry. It comes into effect from 30 March 2008.
Unfettered access
According to UK aviation minister Jim Fitzpatrick: "It is the most liberal agreement of its type, and I hope it will set the standard for other comparable agreements in the future. This is a major step towards extending the benefits of open aviation agreements that travellers already enjoy within Europe. It is the first agreement that gives unfettered access to the London-US market to a non-EU or US airline."
Singapore Airlines, which has for many years been seeking rights to operate transatlantic services from the UK, admits that the openness of the deal came as a pleasant surprise. "This is far more liberal than we ever would have anticipated," says the carrier. "They have blocked us for so long."
Whereas SIA has been prevented from operating beyond the UK, British carriers have for several years been able to fly onwards from Singapore to points in the Asia-Pacific. SIA, which already operates a daily Singapore-Frankfurt-New York service, says it is now looking at its options for possible services beyond the UK to North America. But it says it is not likely to introduce them in the immediate future, in part because of capacity issues.
The carrier will also have to take into consideration its strategic relationship with transatlantic codeshare partner Virgin Atlantic Airways. SIA has recently been examining the future of its 49% stake in Virgin.
"We need to look at this carefully because the situation is very different today compared to when we first started asking for more rights," says SIA. For instance, an already fiercely contested market will become more competitive from March 2008 following EU-US Open Skies. In addition there has been the introduction of the all-premium carriers that have started transatlantic flights from secondary London airports.
SIA says it is considering its options but "capacity is not something you can inject on day one". And to operate a competitive service on Heathrow-New York would require a lot more than a daily operation, says the carrier. "All of this is only theory in some ways because if you cannot get a slot at Heathrow you cannot do anything with it," it says.
Some other Asian carriers already have rights to operate services beyond the UK. However, they have little market impact. Air India, Kuwait Airways and Pakistan International Airways, for example, now operate limited UK-US services. Although Cathay Pacific Airways secured rights to operate UK-USA services several years ago, it has not exercised them in part because of slot-time issues at Heathrow.
According to the UK's Department for Transport, the EU-USA Open Skies deal paved the way for the Singapore accord. "The reasons not to open up are disappearing quite fast," it says. Rather than continue with the traditional stepped approach to liberalisation talks, where each side gives a little ground during each negotiation, the UK proposed the "big bang approach to a full Open Skies arrangement".
A set of strengthened rules against anti-competitive market behaviour or government subsidy have also been agreed between the UK and Singapore. This is the second barrier removed to enable the deal to be struck. "It takes away the possibility of unfair competition - nobody wants capacity dumping," says the DfT.
The UK wants to extend its Singapore experience and will be asking other countries if they want to move away from the incremental negotiation approach to a fully liberal agreement in one go. "It is a new way of doing things and sets a benchmark," says the DfT. "It is what other people should be aspiring to."
Source: Airline Business
