The evolving Asean skies

The skies over Southeast Asia are set to become ever more interesting as each year ticks by on the way to 2015. It is on this date that the open skies deal between the ten members of the Association of South East Asian Nations (Asean) comes into effect. The deal will open up routes between […]


The skies over Southeast Asia are set to become ever more interesting as each year ticks by on the way to 2015. It is on this date that the open skies deal between the ten members of the Association of South East Asian Nations (Asean) comes into effect. The deal will open up routes between most cities in the region which has a total population of over 600 million people and an aggregate economy the size of India’s. While cargo is already somewhat more liberalised than the passenger side, the open skies will clearly have a direct and beneficial impact on cargo as well.

But the vast open Asean sky will have other far-reaching impacts as well, judging by the rustling coming from the Philippine market. It’s not an unfamiliar story – it features an incumbent, legacy carrier and low-cost upstart carrier. In this case it’s Philippine Airlines (PAL) which was very nearly wiped out completely by 1997 Asian Financial Crisis and since has gone in and out of receivership and Cebu Pacific Air, which in just over a decade has overtaken PAL to become the country’s biggest, most profitable airline.

The latest bad news for PAL – incidentally the oldest commerical carrier in Asia, founded in 1941 – is that Cebu has finally confirmed its long expected IPO, through which it hopes to raise US$730 million. That money will go straight to fleet and route expansion, as it taps the region’s open skies.