• Jenny Shipley

"Ground breaking" is Transport Minister Jenny Shipley's description of the new Air Services Agreement with Singapore, approved today by Cabinet. "This is probably the most liberal aviation agreement in the world," Mrs Shipley said.

The new Agreement with Singapore permits airlines of each side to operate over any routing they choose, subject to third-country agreement, and with as many flights as they see fit.

Additionally, there is now no requirement for airlines to file fares for approval, thereby allowing a more prompt response to changing market conditions and a reduction in compliance costs.

Airline ownership foreign investment restrictions have been removed. Effective control of New Zealand and Singapore airlines will, however, remain with nationals of their home country, and will continue to have their principal place of business in New Zealand or Singapore respectively. (Liberalisation of airline ownership was not included in the new Air Transport Agreement signed with the United States in June 1997.)

Local exporters stand to benefit should a Singapore company take up what are referred to as "seventh freedom" traffic rights for cargo. These rights would allow a Singapore company to establish a cargo-only airline in New Zealand to carry on services between New Zealand and third countries, with no requirement that the aircraft touch Singapore. A New Zealand company would have the right to establish a similar cargo operation in Singapore.

Signing of the new Air Services Agreement with Singapore is expected later this year. Meantime, the rights exchanged with Singapore will be applied provisionally.

Air New Zealand and Singapore Airlines are already planning to take advantage of the newly created opportunities.

The new Agreement, negotiated with Singapore in September, is a far cry from the current treaty, signed in 1968, and subsequently amended several times.

"Back then, Governments sought to regulate almost every aspect of the air transport industry, and some still do, but New Zealand has long since moved away from a hands-on approach. We are now prepared to consider negotiating open agreements with any bilateral partner that wishes to do so," Mrs Shipley said.

"Singapore shares our sentiments on air transport liberalisation and is a very important aviation partner for New Zealand. I welcome the opportunities this new Agreement creates for our airlines to add further value to the overall relationship.

"Air transport plays a vital role in the world economy and our new Agreement sets a standard to which we hope others, particularly within APEC, might aspire.

"Earlier this year, I was pleased to sign an 'open skies' aviation agreement with the United States of America, but what we have accomplished with Singapore moves the marker further down the road to a free market in air services," Mrs Shipley said.

The new Agreement with Singapore is wholly consistent with the Bogor Declaration of Common Resolve, in which APEC economies commit themselves to free and open trade in goods, services and investment no later than 2010, and in the case of developing economies no later than 2020.

Mrs Shipley says Cabinet has today also approved negotiating mandates for meetings with Malaysia and Brunei Darussalam, and negotiations with Malaysia will begin next week.

The Cabinet will shortly be considering the text of a similar liberal Air Services Agreement negotiated with the United Arab Emirates earlier this year.