Facebook:@ www.facebook.com/ S Á C H – T À I L I Ệ U T H I T U Y Ể N Trang 1 GRADUATION THESIS Major: International Business Economics THE POTENTIAL IMPACTS OF ASEAN OPEN SKY ON VIETNAM’S AVIATION INDUSTRY Facebook:@ www.facebook.com/ S Á C H – T À I L I Ệ U T H I T U Y Ể N Trang 2 TABLE OF CONTENTS INTRODUCTION.............................................................................................................1 CHAPTER 1: AIR SERVICE LIBERALIZATION: RATIONALE AND THEORY.............................................................................................................................4 1.1 Regulation and deregulation in air service sector: rationale and scope 4 1.1.1 Air service regulation .............................................................................4 1.1.2 Air service deregulation.........................................................................7 1.2 Introduction to an emerging vehicle for air service liberalization: Open Skies Agreement.................................................................................................................... 11 1.3 Economic impacts of liberalization on aviation industry.......................... 13 1.1.3 Impact on competition and fare ..........................................................13 1.1.4 Impact on traffic ..................................................................................16 1.1.5 Impact on strategic behaviour.............................................................18 1.1.6 Impact on route structure ....................................................................20 1.1.7 Impacts on the aviation industry as a whole.......................................24 CHAPTER 2: ASEAN OPEN SKY’ POTENTIAL IMPACTS ON VIETNAM AVIATION INDUSTRY................................................................................................27 2.1 Introduction to ASEAN Open Skies.................................................................. 27 2.1.1 Overview of ASEAN Economic Community.......................................27 2.1.2 ASEAN Open Skies Agreements.........................................................29 2.1.3 ASEAN Open Skies’ progress to realization: ratification status.......41 2.2 Analysis of potential impacts on Vietnam aviation market ..................... 44 2.2.1 Overview of Vietnamese Aviation Market...........................................44 2.2.2 Impact on competition, market scale and fares..................................47 2.2.3 Impact on route structure ....................................................................52 2.2.4 Impact on strategic behavior...............................................................58 CHAPTER 3: POLICY IMPLICATION AND RECOMMENDATIONS FOR AIRLINES ........................................................................................................................60 3.1 Development orientation of Vietnam aviation industry.............................. 60 Facebook:@ www.facebook.com/ S Á C H – T À I L I Ệ U T H I T U Y Ể N Trang 3 3.2 Groups of recommendations for the development of passenger air transport sector ..................................................................................................................... 61 3.2.1 Infrastructure development...................................................................61 3.2.2 More open policies.................................................................................64 3.2.3 Increasing airlines’ competitiveness.....................................................65 3.2.4 Human resources development..............................................................67 3.2.5 Tourism – aviation partnership .............................................................68 CONCLUSION................................................................................................................70 REFERENCES ..................................................................................................