Passenger flights between the United States and China will more than double by 2012 under a new agreement, setting the stage for fierce competition among carriers for these valuable trans-Pacific routes.
US Transportation Secretary Mary E. Peters said the bilateral aviation agreement reached yesterday could stimulate US$5 billion in revenue for US airlines over the next several years. As part of the deal, which falls short of goals the Bush administration laid out last month, American air cargo companies will gain virtually unlimited access to China, The Associated Press reported.
"We've achieved a breakthrough agreement that opens the way for more frequent, more affordable and convenient air service between China and the United States," Peters said on a conference call with reporters.
The accord was announced during high-level talks between the United States and China, led by Treasury Secretary Henry Paulson and China's Vice Premier Wu Yi.
Under the pact, US carriers will be able to operate 23 daily roundtrip flights by 2012, up from 10 currently. The agreement also allows the US to designate three additional airlines to fly to China, at least one of them designated for cargo, transportation officials said.
China will have the right to fly the same number of flights to the United States, Peters said, and can designate an unlimited number of airlines to operate those flights.
While the deal also lifts limits on the number of cargo flights and cargo carriers serving the two countries by 2011, it falls short of Washington's goal of fully liberalizing air travel between the two countries. Peters said the two countries agreed, however, to begin talks in 2010 on a so-called "open skies" agreement
Competition among US airlines for the flights, which one analyst estimated could be worth up to US$200 million in annual revenue, will be intense. Peters said the competition for previous routes "makes some Olympic events look tame by comparison."
Under the agreement, the United States can grant a new airline the right to fly to China and approve a new route this year.
Peters said the department wants to award the new designation as soon as possible, but did not give any additional information on timing. The new route can be from any US international airport to Beijing, Shanghai or Guangzhou.
The routes are awarded based on where the department believes new capacity is needed, as well as other factors, a department official said.
US airlines did not waste any time in publicly pressing their bids. Delta Air Lines Inc. chief operating officer Jim Whitehurst said in a written statement that the company is already seeking approval for a new route from Atlanta to Shanghai. Northwest Airlines, meanwhile, said the accord would allow new routes from its hubs in Detroit and Minneapolis.
Transportation officials indicated that the route to be awarded this year will go to a carrier that does not currently fly to China. That would include Delta and US Airways Group Inc., which has previously said it plans to apply for access to the China market.
AMR Corp's American Airlines, Continental Airlines Inc. and UAL Corp's United Airlines currently fly nonstop to China.
On the cargo side, FedEx Corp. said last month that a more open aviation regime would lead to lower shipping costs.
The department can award another new flight in 2008, four new flights in 2009, three in 2010 and two each in 2011 and 2012. The United States can also designate two new airlines to fly to China in 2009, one passenger and one cargo, Peters said.
(Shanghai Daily May 25, 2007)