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 US$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 May 25, 2007)