businesstraveller.com NOVEMBER 2018
Regulation is oten thought to stif le
innovation, but that doesn’t always hold true.
States have traditionally controlled air travel
in the form of bilateral air services agreements
(ASAs), which regulate the number of f lights
and airlines permitted to operate between
countries. An airline can only operate services
where these ASAs allow it to. Traditionally, ASAs were
restrictive and protectionist, harking back to the “glory
days” when state-owned airlines dominated the industry.
With global trade increasing, it has been the loosening
of these ASAs – as part of what the industry calls
“liberalisation” – that has allowed increased competition,
with free market access leading to a greater movement of
passengers and cargo.
That was certainly the case in 2016, when the UK and
China agreed to expand the number of f lights permitted
between the two countries from 40 per week for each
nation up to 100 (which subsequently rose to 150 in
2017). Restrictions on the number of destinations that
the airlines could serve were also lifted – meaning that
f lights could now operate from any city in the UK to any
city in China. Previously, airlines could only f ly to six
destinations in each country.
Off the back of this expansion, airlines such as China
Southern, Hainan Airlines and Tianjin Airlines have
commenced direct services from their regional Chinese
hubs to the UK. Direct services from Tianjin and
Chongqing to London, for example, would have been
unthinkable ten years ago when services were largely
limited to the state f lag carriers such as Air China and
37The rising presence
of Chinese carriers
has been a headache
for British AirwaysAVIATION
British Airways operating between the main hubs of
Beijing, Shanghai and London. Still, this change hasn’t
been good for everyone. The rising presence of Chinese
carriers has been a headache for British Airways. It was
forced to stop services to Chengdu in 2016 due in part to
this significant rise in competition from Chinese carriers
f lying similar routes.LIBERALISATION AS DISRUPTION
Liberalisation as a form of deregulation has been
disrupting the airline industry for the last 30 years by
breaking monopolies, increasing competition and setting
the stage for the airline industry of today.
It was first pursued by the United States in the early
1990s, in the form of bilateral open-skies agreements, so
that carriers could operate any route between countries
without significant restrictions on capacity, frequency or
price. he same happened in Europe with the creation of
the single EU aviation market in the 1990s, which put
an end to the system of individual ASAs between EU
member states – the effect being that European airlines
could operate freely within the EU, something we take for
granted today (although Brexit may change that).
In 1992, the EU signed its first open-skies agreement with
the United States, which is one reason why there are more
f lights per day between London and NYC than there are
between London and Dublin. In Asia, the ten members
of ASEAN (Association of Southeast Asian Nations)
introduced the framework for an open-skies agreement
in 2015, although implementation remains ongoing, and
similar open-skies agreements exist in many other markets.