The open skies agreement that they recently signed USA and Dominican RepublicFor some, especially those in the public sector, this represents a lifeline that will make the exorbitant prices of airline tickets finally more affordable for users, while for pilots and the country’s Airline Association, it is just a “false expectation.”
Economists are leaning more towards the balance of advantages, hoping that this signing represents more investment for the country, greater competitiveness, as well as more trade and tourism, adding an expected reduction in the price of airfares.
Meanwhile, pilots fear that this agreement will mean the disappearance of national airlines, and that the price of airline tickets will not fall as some sectors predict.
Advantages
According to economists consulted, the pact, made up of 17 articles, has many more advantages than disadvantages, starting with the fact that it facilitates airlines from the signatory countries to operate Flights between the two countries without significant restrictions.
This results in passengers benefiting from an economy of scale, as airlines operate more Flights and carry more people on popular routes, ticket prices can fall.
For this reason, the economist Antonio Ciriacodean of the Faculty of Economics of the Autonomous University of Santo Domingo (UASD), said that in many cases where open skies agreements have been established, airline ticket prices have decreased as a result of competition.
“A plane ticket, for example, to perhaps an area in Puerto Rico, which is obviously an American area, and you find that a certain type of ticket can cost you up to $500 for half an hour. And you calculate how much you are paying in taxes. And obviously that represents almost 30%,” said Ciariaco.
The significant amount of taxes defined in the country is one of the reasons why tickets purchased in the Dominican Republic are usually more expensive than those purchased abroad.
For example, a round-trip ticket from Santo Domingo to New York, purchased in the country, costs between $400 and $600. If purchased from the United States, it costs between $300 and $500. And what about buying a Flight from New York to London, which, despite the distance, costs only about $500? It is cheaper to go from New York to London than to the Dominican Republic.
While, Andres Marranzinimember of the Civil Aviation Board (JAC) representing the private sector, was optimistic about a reduction in airfare prices, according to N Digital.
Disadvantages
Pilots and other sectors of the national aeronautics consider that the agreement will benefit the United States more than the Dominican Republic, because American airlines are usually in a much stronger position to compete in terms of fleet, technology and capacity to capture a greater market share compared to the four supposedly “Dominican” companies that are currently in operation: Air Century, Arajetwhich despite not having the 35 percent of Dominican capital established by the Civil Aviation Law, the Executive Branch granted it a special permit to operate as such; Sky Highowned by Cubans naturalized Dominicans and Red-Airwhich although it is said that the majority shareholder is Dominican, it is common knowledge that the capital is Venezuelan. The agreement allows US airlines to exploit these advantages and further strengthen the kind of monopoly they have in the country.
“They have 99% of the routes. What I do believe is that we will not be able to lower prices or if we do lower them it will be very little and we will not be able to grow as airlines because we have that gorilla sitting on top of us,” says the captain. Francisco J. Diazpresident of the Dominican General Aviation Association.
A similar position was expressed in a statement by the Dominican Pilots Coalition, which considered that “the new treaty represents a great challenge for Dominican civil aviation, given the large size of the airlines with which it will have to compete.”
The negative impact of the few and weak national airlines is also recognized by economists based on what has happened in other nations that have signed this treaty with the United States.
