Six US-China air routes cleared for
takeoff By Edward Russell
SHANGHAI - In a highly anticipated
announcement, the US Department of Transportation
(DOT) recently announced the recipients of newly
negotiated US-China route awards. Six of the seven
applicant airlines received new route authority,
doubling air services between the United States
and China by 2010.
"By bringing China and
the US one step closer, we increase our ability to
compete, boost our success in the global
marketplace, and make international travel for all
passengers easier and more
affordable," US
Transportation Secretary Mary Peters said in a
statement announcing the route awards.
Delta Air Lines and United Airlines will
be the first to begin the new service. Delta will
begin its first service to China from Atlanta to
Shanghai on March 30. United, already with the
most flights between the US and China, will begin
service between San Francisco and Guangzhou early
next year.
"Delta's new flights to China
will fill a critical void in air travel today by
providing the 65 million residents of the [US]
southeast with direct access to the world's
fastest-growing economy," said Delta's chief
executive office Richard Anderson in a statement.
Delta's application for service between Atlanta
and Beijing was denied.
Susan Chana
Elliott, senior manager of regional media
relations at Delta, said: "We [Delta] believe
there will be additional opportunities for service
between Atlanta and China and we will continue to
vigorously pursue those."
Delta's service
to Shanghai will follow a period of service cuts
to East Asia by the airline. Since emerging from
bankruptcy on April 30, Delta, like many US
airlines, has been seeking new, lucrative
international routes.
In addition to the
two new routes beginning next year, the DOT
announced four proposed route awards to American
Airlines, Continental Airlines, Northwest Airlines
and US Airways. The four proposed route awards
will begin service in 2009 and include non-stop
flights from Chicago, Detroit, Newark and
Philadelphia to Beijing and Shanghai.
The
new air-service rights were negotiated in May
during the Sino-US Strategic Economic Dialogue
between US Treasury Secretary Henry Paulson and
Chinese Vice Premier Wu Yi and agreed to in July.
The US-China air-service agreement allows for one
additional passenger flight by an airline of each
country in 2007 and 2008, four in 2009, three in
2010, and two each in 2011 and 2012. Discussions
for "open skies", unlimited air service between
two countries, will resume in 2010 under the
current framework.
Controversy surrounds
the awarding of additional air-service rights to
US airlines because Chinese airlines have yet to
use all of their allotted frequencies. According
to the agreement signed in July, Chinese airlines
are currently allowed 10 frequencies to the US but
as of this month only have six scheduled flights.
US airlines operate all 10 frequencies and
continue to demand more; for the latest round of
route awards, the DOT received 10 applications for
six available frequencies.
"The market
between the US and China is anticipated to have
robust growth over the next couple of years," said
a US Embassy official who declined to be
identified. "We sought to expand air-service
rights because we expect there will be a
significant increase in passenger and cargo
traffic and wanted to be ahead of the curve with
the anticipated increase in demand."
Last
year 842,694 passengers traveled between the US
and China, a 25% increase over 2005 according to
the US Bureau of Transportation Statistics. US
airlines carried 59% of passengers between the US
and China.
"For now, the US-China routes
are among the system stars for the American
carriers, who are getting most of the high-yield
traffic," said Richard Pinkham, a Singapore-based
consultant for the Center for Asia-Pacific. "The
Chinese carriers have so far underperformed, which
is one reason they have lobbied to keep tight
capacity restrictions in place. However, as their
products are improved through cooperation with
Cathay Pacific [in the case of Air China] and
Singapore Airlines [China Eastern], the gap should
narrow."
Chinese carriers Hainan Airlines
and Shanghai Airlines both plan to begin service
to the US next year. Hainan has applied for
service between Beijing and Seattle and Shanghai
Airlines has applied to connect Shanghai to both
Los Angeles and Seattle. The biggest restriction
on Chinese airlines' growth on air service between
the US and China is lack of the necessary
aircraft.
"After joining Star [Alliance],
Shanghai Airlines will introduce a hub-and-spoke
network to and from Shanghai [Pudong International
Airport] ... we will adjust our schedule of the
flights between Pudong and some key domestic
cities and therefore, through three to four flight
banks, passengers of Shanghai Airlines and Star
can make efficient and smooth transfers at
Pudong," said Gu Jiadan, vice managing director of
Shanghai Airlines.
The Star Alliance,
launched in 1997, is the oldest and largest
airline alliance in the world, and joining one of
the international alliances is another method to
increase Chinese airlines' market share between
the US and China. Shanghai Airlines has observer
status in Star Alliance since 2005 and it predicts
that it will have full membership by early next
year.
Under the new route awards, US
Airways will add a Philadelphia-to-Shanghai
non-stop. United and US Airways are already Star
Alliance members.
United Airlines, with
42% of the US-China market, received route
authority to begin San Francisco-Guangzhou service
early next year. The new route comes after United
began a Washington-Beijing this year.
The
new route comes after five years of no new
aircraft but significant international expansion
for United. Internal sources at United report that
the company is considering a sale of the airline's
lucrative trans-Pacific air-service rights. All
flights to and from China would be included in
such a sale. United purchased its Asia-Pacific
operations from Pan American World Airways in
1986. Pan Am collapsed in late 1991.
"Both
the US and China have clear economic benefits
garnered by increased air service," said the US
Embassy official. "The economic benefits of
landing a large aircraft in a city is significant.
A plane generates landing fees and passengers
disembarking an aircraft spend money inside the
airport and in the city, which results in
significant trickle-down benefits."
Edward Russell is a
Shanghai-based freelance journalist.
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