Bounty for American airlines in accord
Updated: 2007-05-25 06:44
The new Sino-US aviation agreement is expected to give US carriers a greater market share on routes linking the world's two major economies, while creating greater competition for Chinese airlines to fight off.
US airlines have been allowed to more than double the number of passenger flights to China to 23 a day by 2012, from the current 10, according to the agreement reached on Wednesday during the China-US Strategic Economic Dialogue in Washington.
The limits on the number of cargo flights and carriers will also be lifted by 2011.
The new flights will generate $5 billion of business "over the next several years" for US airlines, US Transportation Secretary Mary Peters was quoted by Bloomberg as saying.
The aviation pact is "a timely and huge boost" to major US airlines, analysts said, as they explore more profitable international routes to help ease the pressure from the intense competition at home caused by overcapacity and the fast growth of low-cost carriers.
The cargo provisions in the new agreement will also allow FedEx and UPS to further tap into China's express delivery market, which is expected to maintain a fast growth rate of 30-35 percent annually in the next three years.
"We look forward to future negotiations by 2010 and to a fully liberalized international cargo regime in China," FedEx said in a statement.
The next passenger route to China will go to a US carrier that does not fly the sector now, Bloomberg quoted Assistant Transportation Secretary Andy Steinberg as saying. He said the winning carrier could start the service as early as August.
Another daily flight will be added in 2008, with four in 2009, three in 2010 and two each in 2011 and 2012.
"This is definitely bad news for Chinese airlines," said Li Lei, an aviation analyst with CITIC China Securities.
"China's three largest airlines are all losing money in the US sector. They will face a bigger pressure now," said Li, adding that Chinese carriers are disadvantaged because of their weak branding and international marketing.
Li suggested Chinese companies focus on improving business on their existing routes by attracting more premium travelers and strengthening Chinese passengers' loyalty.
Comments from Chinese carriers were not immediately available.
Currently, four of the six major US airlines that fly out of the western hemisphere are operating in China. They are: United Airlines, Continental Airlines, American Airlines and Northwest Airlines.
Delta Air Lines has been pushing to fly between Atlanta and Beijing in 2008. It set up a sales office in Beijing at the end of 2005.
(China Daily 05/25/2007 page14)
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