Of all industries in ASEAN, aviation is probably the farthest from reaching the goal of true integration. Analysts and airlines say that’s preventing one of the world’s fastest growing regions for aviation from reaching its true potential. There has been some progress, though.

It has got a lot easier for ASEAN airlines to fly in and out of each others’ countries and especially, capitals, in recent years, boosting competiton and connectivity.

And it should be easier still now that Laos and Indonesia have signed the ASEAN Open Skies agreement.

Still, Laos is curbing access to its two most popular destinations, while Indonesia is only opening handful of airports toASEAN airlines.

Also, ASEAN countries continue to steadfastly restrict ownership. That means that outside of its home country Malaysia, Air Asia, for instance, must partner with local investors who hold a majority stake…effectively setting up a string of separate airlines.

“I take the European model as my eventual aim. I would use Easy Jet and Ryanair as examples that they can fly anywhere in Europe without setting up joint ventures, etc. We are far away from the efficiency we could be if we had one model. I mean a Chinese airline has a billion people, we have to have 10 different airlines just to reach 700 million people in one market,”said Tony Fernandes, chairman of Air Asia Group.
 
The potential benefits of greater regional integration of aviation are enormous.

“It would promote productivity, greater efficiency, cost of bureaucracy goes down tremendously. Over time it will translate into a more efficient industry, lower ticket prices, and also drive the thrust of consolidation around the region,”said Mohshin Aziz, aviation analyst of Maybank Investment Bank.
 
One constraint is that the main airports of cities such as Bankgok, Manila and Jakarta are running at full capacity.
So ASEAN countries are also going to have to improve their aviation infrastructure in order to move toward, and reap the benefits of, true Open Skies.