In November 2010, the ten States of the Association of Southeast Asian Nations (ASEAN) adopted a new air transport agreement (ATA) between them, as one entity, and the People's Republic of China. At first glance, the new ATA is significant - it offers unlimited third/fourth freedom access between the ASEAN States and China. Crucially, however, it falls short of allowing the ASEAN carriers to operate between another fellow ASEAN Member State and China. The ATA is thus not a full-fledged common aviation market arrangement. In effect, it provides the Chinese carriers with a greater advantage in that they are able to connect any point in China with any point in ASEAN. Conversely, the ASEAN carriers can only connect any point in their home States with any point in China. This asymmetry will prove disadvantageous to the ASEAN carriers in the long run, reminiscent of the problems the European carriers once faced with the United States. The ATA must be understood within the context of the separate but related intra-ASEAN liberalization agreements, themselves works in progress that have not yet created a common aviation market within ASEAN itself. By pursuing an ATA with an external market without carving out a unified internal market first, ASEAN appears to be placing the cart before the horse and setting its airlines up for serious competitive disadvantages once the Chinese carriers become stronger players.
Air and Space Law