EAP - The Pacific Infrastructure Challenge - World Bank (2006).pdf

An alternative reform model is for the Government to operate on a
‘Landlord’ basis, with selected services contracted out to private operators. In
smaller airports, contracts could be awarded for all terminal services instead
of on a service by service basis
Existing traffic to and from the Pacific does not appear to justify significant
airport expansion. However, expansion would contribute to, and be necessary
for, an expanded tourist industry within the region. The experience in Punta
Cana in the Dominican Republic suggests that if governments are prepared to
support private investment in an entire tourist package, the country may benefit
from increased tourism while limiting government investment and risk.
A.3.7 Institutional Analysis for Air Services
Many Pacific countries’ air services are governed by bilateral air services agreements
which provide a framework within which airlines of one country are allowed to fly into
and beyond the other country. The frequency, capacity and other operational issues are
normally covered by Memoranda of Understanding (MOUs) accompanying the
agreements. The agreements cover the rights of carriers to carry passengers originating
and terminating in foreign territories.
For many years, these agreements have limited the airlines allowed to fly between various
countries to their national carriers, and restricted capacities on routes. Unusually, Samoa
has an open skies agreement with the United States including beyond rights. Now,
Pacific Countries are considering liberalization, as outlined in Box A.12.
Box A.12 : Open Skies in the Pacific: Pacific Islands Air Services Agreement (PIASA)
The Pacific Islands Air Services Agreement (PIASA) is a Pacific Islands Forum Secretariat initiative aimed
at preparing Pacific Island countries for gradual adoption of a region-wide ‘open skies’ regime. In May 1998,
the Pacific Islands aviation ministers agreed in principle to move towards the liberalization of regional air
services agreements and at a subsequent meting in 1999, they agreed to the concept of a single Pacific
Islands aviation market with the drafting of a multi-lateral agreement, which the Pacific Islands Forum
Secretariat would organize. The impetus for these agreements was the recognition that existing bilateral
agreements restricted market access within the region and limited the growth and development of air
transport.
PIASA is due to be implemented in three phases over a period of five years. The first phase involves
granting Fifth Freedom rights to new Pacific Islands Forum Secretariat countries that do not currently have
international services. Phase two involves extending Fifth Freedom rights to all countries to operate within
the region, and in the third phase Fifth Freedom rights will be extended to all Pacific Islands Forum
Secretariat countries outside the region.
Current signatories to PIASA are the Cook Islands, Nauru, Samoa, Tonga and Vanuatu. Protecting national
carriers is one of the key reasons more countries have not yet signed up to this agreement. The Association
of the South Pacific Airlines (ASPA) has noted that “the national carriers of the region warrant relative
protection from “unnecessary” competition on some profitable routes which have been developed by and
invested in by Pacific island carriers”. The argument is that the national carriers in the region are operating
in a relatively high-cost environment and would not be able to cope with competition on most routes. It is
feared that this would result in the collapse of some of the smaller national carriers in a similar manner to
the Ansett collapse. This position is supported by Fiji.
In fact, neither the Ansett collapse nor the financial difficulties of Air New Zealand, have resulted in fewer
(or no) air services to New Zealand. On the contrary, several new carriers have started flying to the country
on main routes, such as United Arab Emirates and Pacific Blue.
Source: “Fiji’s position on multilateral air service agreements” Worldwide Air Transport Conference:
Challenges and Opportunities of Liberalization, 2003; Pacific Islands Forum Secretariat and Castalia
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