Incumbent carriers have won a reprieve from the immediate entry of new players on China-USA routes, with a surprise new air services agreement signed in April which protects them for at least two more years.
The agreement was signed on 9 April in Washington during Chinese premier Zhu Rongji's official visit to the USA. According to China-based US airline sources, the deal was reached only days earlier following an "all-night" round of talks held in Beijing.
The accord was struck just over a month after the failure of an earlier round of talks. But with China and the USA at odds over a number of major issues and, with little substance supporting Zhu's high-profile visit, politicians at the highest levels of government from both sides ordered a deal to be reached in time.
The new accord doubles the number of weekly scheduled flights for airlines from each side, to 54 from 27 by 1 April 2001. Eight new flights are available immediately, followed by nine more on 1 April 2000 and a further 10 a year later.
An additional carrier from each side will not be licensed until 1 April, 2001, however, protecting the six incumbents from new competitors for a little longer as the damaging effects of the regional economic downturn continue to take their toll on air travel. FedEx, Northwest Airlines and United Airlines operate to China, while Air China, China Eastern Airlines and China Southern Airlines operate to the USA.
The deal also gives US carriers unlimited rights to choose their originating USA cities, while US and Chinese carriers will be allowed to serve two additional points in the other country. By 1 April, 2002, US carriers will be able to serve 20 more Chinese cities through codesharing arrangements with Chinese partners, while Chinese carriers will be able to serve 30 more US cities with US codeshare partners. Further talks are to be held within a year on issues such as additional carriers in the market, codesharing between same-country and third-country airlines, charter operations and the establishment of US carrier ticket offices in China.
Source: Airline Business
