SINGAPORE CARRIERS' RIGHT TO FLY BEYOND AUSTRALIA

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SINGAPORE CARRIERS' RIGHT TO FLY BEYOND AUSTRALIA: 3.

Mdm Halimah Yacob asked the Minister for Transport whether the Australian authorities have agreed to allow Singapore Airlines or any Singapore-owned airline the right to fly beyond Australia to the United States , as Qantas is now allowed to fly beyond Singapore to Europe and to compete for the regional market from a base in Singapore .

Mr Yeo Cheow Tong: Mr Speaker, Sir, the Australian government has not granted Singapore carriers the right to fly beyond Australia to the United States on the trans-pacific route.

Under the current Singapore-Australia air services agreement (ASA), which was last expanded in September last year, both Singapore and Australia designated airlines are restricted in their 5 th freedom rights to fly beyond each other's country.

Given our close bilateral relationship, including the recently concluded Singapore-Australia FTA, and the many business and social linkages between our people, Singapore has always been ready to conclude a full Open Skies Agreement (OSA) with Australia . A full OSA will enable Australian carriers to freely fly to and beyond Singapore , without any restrictions, to all points, including major European and Asian destinations. Likewise, Singapore carriers will be able to fly

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to and beyond Australia . Specifically, the Australian public will also have more choices of airlines to choose from on the trans-pacific route to the United States . An OSA will be a win-win outcome for both Singapore and Australian carriers. More importantly, it will bring significant benefits to both economies given the sizeable multiplier effects of increased air links between and beyond both countries.

However, Australia was not ready to conclude an OSA in September last year as the global industry had just begun recovering then. Nevertheless, Singapore and Australia had agreed "to continue to work towards the conclusion of an open-skies agreement and to consider further liberalisation, including trans-pacific rights, when there is greater stability in the global aviation environment".

Since then, the outlook for global aviation environment has been very positive. The International Air Transport Association (IATA) has in fact projected a growth of 7% in global passenger traffic this year. For routes within Asia Pacific, a growth of 14% can be expected because we are comparing against a very low base last year because of SARS.

Qantas Airways has also reported positive financial results. It had announced that the company's businesses have returned to profitability and that it is in good position to take advantage "of what appears to be a return to more stable market conditions". As there are enough indicators that the global and regional aviation environment has stabilised, we are engaging our Australian counterparts on realising the full open skies agreement.

As Mdm Halimah has mentioned, Qantas Airways has recently announced its investment in a new low cost airline to be based in Singapore . Singapore welcomes any foreign carrier to be

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involved in a LCC venture in Singapore , if the proposal strengthens our hub status. In the case of Qantas, we welcome their decision as it will entrench their existing hub operations in Changi. The low fares of the LCC will stimulate greater traffic volumes between Singapore and regional cities. It would also enable Qantas to bring in more long-haul travellers from Europe and Australia to transit and transfer through Changi to the region. It is likely that some of these new travellers will stop over in Singapore , hence creating more jobs and boosting our tourism receipts. It is therefore in our national interest to have Qantas base its new LCC in Singapore and continue growing its hub operations here.

The establishment of new LCCs in Singapore and other new airlines in the region will change the regional aviation landscape in the years ahead. However, SIA will continue to share a symbiotic relationship with Changi and must continue to play an important role in enhancing our hub airport status. Therefore, we will continue to further liberalise our air services agreements and increase our air rights with other countries. With more air rights available, both SIA and other new Singapore carriers will be able to grow. In turn, their growth will strengthen Changi's role as a hub airport.

Mdm Halimah Yacob (Jurong): Sir, I would like to ask the Minister how long does he think this process of negotiation leading to the conclusion of an open-skies agreement will take, considering that there is already stability and the fact that Qantas will be already flying from Singapore in view of the recent developments here?

Mr Yeo Cheow Tong: Sir, I can assure the Member that we are engaging the Australian authorities and I intend to press the issue very strongly.