Synopsis
Recommendation 5 : Multiple Airline Designation
Coordinating economy : Republic of Korea
At the 17th APEC Transportation Working Group Meeting, the More Competitive Transportation Industry Steering Committee held a Special Air Service Meeting and decided to review the implementation of the eight recommendations. With respect to the review of the eight recommendations, each economy was invited to make a submission to the coordinating economy for each recommendation.
Korea was chosen as the coordinating economy for Option 5: Multiple airline designation.
ASGs recommendation in regard to option 5 was as follows;
The ASG recommended that APEC economies include, as appropriate, multiple airline designation in their bilateral air services agreement.
This recommendation was categorized as high priority.
In April, Korea forwarded a questionnaire on Recommendation 5 "Multiple Airline Designation" containing the following questions to the member economies.
1. Which airline designation system, multiple or single, has your economy adopted? If your economy prefers single airline designation, what are the reasons?
2. Describe your experience in implementing recommendation on option 5 multiple airline designation.
3. What do you think of difficulties and benefits in transferring from single to multiple airline designation?
Responses
10 APEC economies and 2 organizations in Australia have responded to these questions. Responding economies are Australia; Brunei; Chile; Chinese Taipei; Hong Kong China; Japan; New Zealand; Singapore; Mexico and the U.S..
Summary of responses:
Most responding economies have adopted multiple airline designation in their Air Services Agreements with other APEC economies with the exception of one economy which has only adopted it for cargo services.
Most economies have not faced special difficulties in adopting multiple airline designation. Some economies did regard allocation matters, resistance of incumbent carriers and insufficient infrastructure as difficulties.
2 economies have proposed that multiple airline designation be considered together with Market Access.
The main benefits of multiple airline designation are facilitating competition and giving more opportunities to customers.
Other benefits and difficulties of multiple airline designation have been put in table format for convenience.
|
Benefits |
No. of Economies |
Difficulties |
No. of Economies |
|
Increasing competition and enhancing efficiency |
6 |
Allocation route and capacity entitlement matters |
1 |
|
Giving more choice (opportunity) to consumers from increased efficiency and lower costs |
7 |
Objection from the incumbent carrier |
1 |
|
Giving more flexibility to airlines to meet consumer's demand |
1 |
The limited capacity entitlement |
1 |
|
Development of the tourism industry |
1 |
Reluctant manner from economies which have only one airline |
2 |
|
Giving opportunities to new airline to access new routes |
3 |
Insufficient infrastructure etc. slot |
1 |
|
Giving flexibility to both sides in designation |
1 |
Difficulties in changing operations to be competitive |
1 |
|
|
|
Causing disequilibrium between economies |
1 |
Summary review
As seen from the responses, multiple airline designation is considered to be an essential aspect for more competitive air services and many APEC economies have shown positive reaction to its adoption. One of the important reasons for expansion of multiple airline designation is that many economies have more than one national carrier which provides international air services. This is the case for Korea where a second national carrier was established in the late 1980s. Since then, Korea has proposed to adopt multiple airline designation when concluding new agreements or amendments with APEC other economies.
Multiple airline designation provides opportunities for many airlines to operate services on one route, thereby increasing competition among airlines which in turn enhances efficiency of the airlines. For the consumers, multiple airline designation means more choices and that they can anticipate lower fares as a result of the competition.
However, some member economies with only one national carrier still have been reluctant to adopt multiple airline designation, while some economies have implemented it in a limited form by designating 1~2 airlines for each route. Another difficulty that arises from multiple airline designation is the distribution of capacity entitlements of routes among the many available airlines.
Despite these difficulties, the adoption of multiple airline designation is expected to expand continuously in the future because benefits of adopting multiple airline designation overweighs the difficulties.
In regard to cooperation with other multilateral fora to deliver the results of this review concerning multiple airline designation does not seem to be a need to do so. This is because this recommendation is somewhat simple compared to other recommendations and there is no special dispute on this issue.
This page was last updated on 6 Nov., 2000