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With decree number 256, Ecuador applies Open Skies policies in order to strengthen connectivity in favor of tourism growth that seeks to generate the desired 1 a 1 (the same number of inhabitants as tourists).
With the recently approved and published Decree signed by the President of the Republic Lenín Moreno, Ecuador opens a new era in its commercial aviation policies that for the last few years had been penalized or limited in growth, since this was considered access only for people with high resources.
For this reason, taxes such as the EcoDelta were created – ED of $50 dollars for all international tickets issued in Ecuador and the PotenciaTuristica – PT for all international tickets to Ecuador, these only made the tickets even more expensive and generated a downturn in the industry and no public results were seen from the money raised.
With the implementation of new benefits for airlines such as the jet fuel subsidy case for airports managed by the General Directorate of Civil Aviation and municipal administration, The Ecuadorian Government seeks to boost the sector, generate new investment opportunities and above all, boost the aeronautical business that has stagnated and that little by little is beginning to show better results in terms of income and passengers carried by airlines.
The reality is that Ecuador does not have an easy scenario to generate the arrival of new airlines to the country and therefore more tourists.. Direct competition from powerful tourist countries such as Colombia and Peru, They have made us a less attractive country for airlines despite all the natural and gastronomic benefits that we have, Added to this is the complexity of the certification processes for new operators and the red tape. This panorama begins to change with the arrival and interest of more operators such as Spirit Airlines, Condor, the return of VivaColombia and the air trade agreement with Canada.
Ecuador applies Open Skies policies
In order to understand the potential benefits or not of these policies, We must first know the conceptual meaning of "Open Skies".
The expression open skies refers to the maintenance of bilateral or multilateral civil air transport agreements according to which:
- In the case of civil treaties, the air transport markets of the signatory countries are liberalized and government intervention in passenger services is minimized, cargo and combined either regular or charter.
*With information from various sources.
Generally, Open Skies are treaties that are signed between 2 or more nations in order to expedite and invigorate the aeronautical business between the countries involved in order to reduce government interference, that will end up generating, potentially, more flights between them as times are reduced, procedures and operating restrictions by current bilateral agreements.
In the case of Ecuador, the creation of these policies will allow the country to sign in the future, Open Skies agreements with one or more countries that wish to expand aeronautical exchange.
Open Skies policies also bring with them openness, so to speak, of Ecuadorian airspace so that airlines can fly to Ecuador with up to seventh freedoms of the air in the case of combined cargo and passenger transport.
A similar agreement currently exists between the CAN countries – Andean Community for the exploitation of services and rights of users with the Decision 528 of which Ecuador is part.
Presidential decree 256 – 2017
Article 1- Adopt as national public policy, the full liberalization of air transport by Ecuador, except for cabotage traffic.
Article 2.- The negotiation of traffic rights referred to in this Executive Decree will be subject to the particular analysis of each case..
Article 3.- Existing air transport agreements, will be renegotiated under the terms of this Executive Decree, whenever the parties involved deem it appropriate.
Article 4.- The Ministry of Transport and Public Works and the Ministry of Foreign Affairs and Human Mobility, in coordination with the Ministries of Tourism and Foreign Trade, will be in charge of the negotiations of open skies agreements.
Article 5.- In the negotiation of agreements, the principle of free and healthy competition must be respected, guaranteeing the permanent provision of services and preventing unfair practices or the abuse of dominant or monopolistic positions.
Article 6.- The international airports that will be the subject of negotiation of these agreements, correspond exclusively to those who are in continental Ecuador.
Final disposition.- This Executive Decree shall enter into force upon its publication in the Official Gazette..
General characteristics of the Open Skies
- free market competition
- Non-imposition of restrictions on international flights in terms of the number of airlines, ability, frequencies and aircraft used refers to.
- Market prices and rates:
- A tariff can only be disallowed if both countries so wish and only in very specific cases.
- competition on equality
- For instance:
- All airlines (whether or not they are in the agreement) both parties can establish offices in the other country and dispose of the benefits that they generate quickly and without restrictions. Designated airlines are free to use their own service handling (ground baggage management) or hire one of your competitors. Airlines and consignees can organize as they wish the land distribution of merchandise received by air and are guaranteed access to Customs services..
- The fees charged to users are simply determined by the costs of the service, and computerized reservation systems must be transparent and non-discriminatory.
- Economic cooperation agreements
- Designated airlines can enter into codeshare agreements or lease aircraft to carriers from either country or even from third parties under current regulations.. Optionally, airlines and ground carriers can also be allowed to carry out codeshare operations.
- Conflict resolution advice
- Procedures are included to resolve differences related to the interpretation of the Agreement.
- Freedom of charter services
- Companies can choose which regulation they apply to operate charter flights.
- Security
- Each government undertakes to maintain the highest possible levels of aviation safety and to assist the other in certain circumstances..
- Optional application of the 7th Freedom of the Air regarding cargo transportation
- An airline is allowed to carry out cargo operations between the other country and a third party through flights that do not have to make stops in, come from or have as destination the country of origin of said airline.
*With information from various sources.
Benefits of Open Skies
- Flexibility of procedures.
- Openness in the allocation of frequencies.
- Free assignment of the teams to fly.
- Potentially arrival of more airlines from participating nations.
- Free competition between airlines that benefits the user.
- Airfare reduction.
- Potential increase in tourism.
- Potential cost reduction in airfare.
Disadvantages of Open Skies
- Small airlines will not be able to compete against large groups since they would lose the protectionism of the State.
- Small airlines will have to face the reality of an economy of scale.
- That the exclusive competition of one or two dominant companies is generated in the assigned routes.
- Closure of small airlines and the corresponding unemployment.
Does Open Skies Work??
The answer is yes, but they come hand in hand with the reduction and elimination of taxes, legal security, citizen security, tourism promotion, incentives for import and export, airline incentives, import of parts and spare parts without formalities and others.
Open Skies cannot go it alone as a hope that more airlines will magically arrive and the market grow. The Government must also generate a great strategic plan for connectivity and aeronautical business so that this plan can work and an improvement and tourism growth can really be seen, which is what is expected to be the final result of the implementation of these policies..
It is important, that in an Open Skies policy, current existing airlines are not left behind, big or small size, to safeguard the well-being of workers in all areas that could potentially be harmed.
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