China Business

May 18, 2006

Airlines challenged by Sino-US agreement

BEIJING - China and the United States will probably launch a new round of negotiations concerning the opening up of navigation rights in the latter half of 2006, the Shanghai Securities News has reported.

An official from the Civil Aviation Administration of China (CAAC) said that a full opening up of international navigation rights is not

feasible. Rather, China will adhere to the principle of progressively opening navigation rights.

The opening up of navigation rights is definitely a double-edged sword, which has brought domestic airliners such as China Eastern Airlines and China Southern Airlines not only a broader market but also fiercer competition.

China Eastern Airlines chief executive officer Li Fenghua said that Chinese airlines do not expect a too fast opening up of navigation rights. The greater openness in Sino-US navigation rights beginning in 2004 has brought much pressure on domestic aviation firms.

US airlines have already fully utilized the navigation rights specified in the Sino-America Aviation Agreement signed by the two sides in July 2004, and called for a further opening up. But Chinese airlines have thus far utilized less than half of the navigation rights they were granted by the same agreement.

Due to the big gap between domestic airlines and American airlines in terms of fleet scale and management, a blind opening up of navigation rights may challenge and do harm to domestic airlines, industry officials have argued.

(Asia Pulse/XIC)

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