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Larry Kellner, chairman and CEO of Continental Airlines, has expressed his strong confidence in the carrier's application to the US Department of Transport (DOT) for another Sino-US direct daily flight linking metropolitan New York/Newark and Shanghai, China's commercial hub.
"From our experience, the DOT will make the final decision based on two key criteria one is whether the new flight can encourage competition and prevent monopoly, the other is whether the new route will benefit most people. We meet both standards," Kellner explained.
Compared with United Airlines and Northwest Airlines, Continental is a latecomer to the Chinese mainland market, having just launched its daily Beijing-New York flight in June last year.
Rather than United Airlines and Northwest Airlines, more opportunities should be granted to US carriers that do not have a strong presence in China. Only in this way can competition be encouraged, Kellner said.
Industry insiders predict that Continental has a good chance of winning the contest for the new route, with the airline having recently purchased two Boeing 777 airliners to fly on it.
"We know there is substantial demand for the Shanghai-New York service, which will offer competitive benefits to customers both in China and the United States," Kellner said.
Currently, there are no non-stop flights from the northeastern United States to Shanghai, despite the route's great business potential.
The New York/New Jersey area has a far larger population of Chinese-Americans than any of the other cities seeking a new China route. Continental's route application has already received backing from the Port Authority of New York and New Jersey, the Manhattan Chamber of Commerce and New Jersey Governor Jon Corzine.
According to Reuters, the carrier has received more than 15,000 letters supporting its application, and this is the major reason Continental Airlines is confident that it will be approved by the DOT.
Moreover, Kellner emphasized that the success of the Beijing-New York service can add weight to Continental's application for a new route linking Shanghai and New York.
Despite being in service for just over a year, the Beijing-New York flight has been successful, with its load factor reaching 85 per cent.
"Based on our successful Beijing-New York service over the past 15 months, and strong business and leisure market demand in the Shanghai-New York market, we are confident that Continental Airlines will be awarded the Shanghai-New York route which will start in March 2007," Kellner added. The Continental chairman expected the DOT's final decision to be made by the end of this year.
"At the present stage, it is hard to predict who will win the competition to offer the added service. What is certain is that all four US airlines are keen to open new business to China, and how effectively they lobby the US transport authority will make the difference," said Liu Weimin, director of the Aviation Laws Research Centre with the Civil Aviation Management Institute of China.
Apart from Continental, the other three major US carriers United, Northwest, and American Airlines are all vying to expand their flights to China.
United plans to offer flights from Washington D.C. to Beijing, as there is currently no service between the two capitals. American Airlines hopes to add a service between Dallas/Fort Worth and Beijing, while Northwest has proposed a Detroit-Shanghai route.
"We understand that Continental has the upper hand in the competition for the new route, because its proposed flight links Shanghai and New York, where lots of Chinese people live. However, we also believe the New York area is already well served by Chinese carriers, such as Air China and China Eastern," said Ai-Phuong Dang, vice-president of Air Service Development for Dallas/ Fort Worth Airport.
"In comparison, the southern part of the United States, such as Texas, is under-served by direct flights to and from Chinese cities. That is why we think American Airlines also has a chance to win the new route," Dang stressed. Currently, there are only three US gateways to China Newark, Chicago and San Francisco.
Compared to their US counterparts, major Chinese carriers with flights to the United States are not so advanced in terms of their plans to tap the potential of Sino-US routes.
"Chinese companies are taking a back seat in the competition to tap the Sino-US aviation market, due to their relatively weaker position. Although the new Sino-US aviation pact signed in 2004 is supposed to grant carriers from both countries equal business development opportunities, Chinese airlines cannot fight their US counterparts on an equal footing in terms of business expansion," Liu commented.
The new round of Sino-US aviation negotiations expected to begin in late August and early September were postponed because of the gap between US and Chinese carriers, said an industry insider.
"Under the current market situation, local carriers have a hard time competing against global giants such as Continental. That is why US airlines are enthusiastic to fly to China, while Chinese carriers are hesitating to open more flights. For local airlines, more flights may mean more losses if they cannot get enough passengers," Liu added.
China Eastern Airlines, one of the country's top three carriers, is scheduled to fly to New York from Shanghai by the end of this year. Four to five flights a week are planned on the new route.
(China Daily September 30, 2006)
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