The newly signed Sino-US agreement on expanding air services
between the two countries has intensified competition for the
nation's civil aviation market.
United Airlines announced on Friday that it has been awarded the
right to operate daily non-stop flights between Shanghai and
Chicago as of November 1.
The inaugural flight will lift off from Shanghai's Pudong
International Airport and the tickets are already on sale for the
new daily service, a press release said.
With the new route, United Airlines will offer 28 non-stop
flights per week between China and the United States.
At the same time, FedEx Express said it has applied under the
new agreement to add 18 new weekly cargo flights from the United
States to China, Associated Press reported.
United Parcel Service of America (UPS) also filed an application
to the US Department of Transportation to establish a cargo hub in
Shanghai, sources from UPS said.
Compared with US airlines who look to seek a lion's share of the
big aviation market, domestic airlines seem to be slow in
responding to the "apparent opportunities" that the agreement
offers.
According to the agreement, the number of weekly flights between
the two countries will increase nearly five times -- from the
current limit of 54 weekly round trip flights to 249 weekly round
trip flights -- within six years.
It also allows five additional airlines from each country to
serve the US-China market.
Insiders say the US airlines might benefit more from the new
agreement than their Chinese counterparts since the latter do not
have enough transport capacity to take advantage of the
opportunities the deal offers.
Currently, domestic airlines can only handle 80 per cent of the
approved flights between China and the United States while their US
counterparts are looking to increase flights to match their
transport capacity, Jiang Yong, an expert with the China Institute
of Contemporary International Relations, told Beijing Business
Today.
"Although the agreement is based on a win-win principle, the US
side tends to be in a more beneficial position," he was quoted as
saying.
The situation will last for a certain period and will not be
easily changed, he added.
In a short period, the beneficiaries of the agreement will be
besides US airlines airports in the two countries because the
number of planes landing and taking off will be on the rise, the
expert said.
"Domestic airlines will have to reorganize their resources to
meet the challenge of fierce competitions," Jiang said.
However, some experts are optimistic about the signing of the
agreement.
"In the long run, the introduction of competition from foreign
airlines will help break the monopoly of the nation's civil
aviation industry and step up the reforms of the sector," said
Huang Taiyan at the School of Economics at Renmin University of
China.
In fact, domestic airlines are working to improve their
competitive abilities by increasing air fleets.
Air China Cargo Co has ordered two Boeing 747-400 Freighters
worth a total of about US$400 million at list prices, sources from
Boeing Co said.
The planes will be used on the carrier's routes between China
and North America. The first is to be delivered in November 2005
and the other in March 2006.
One month ago, China Eastern Airlines signed an memorandum with
Air Bus on booking 20 A330-300 passenger jets.
China Southern Airlines also was reported to have invested 10
billion yuan (US$ 1.2 billion) to purchase planes.
Insiders say the total number of planes that domestic airlines
will book within the year will amount to more than 180.
(China Daily July 31, 2004)