The May 24 issue of Aviation Daily includes a story (see here for free) by my colleague Adrian Schofield about how the new air service deal between the United States and China will more than quadruples the number of passenger flights to be awarded in the next five years.
Under the current deal, the U.S. can add three daily flights by 2010, while the new pact sees 13 added by 2012. The agreement does not set a timetable for full open skies, and while it does call for open-skies talks to resume in 2010, no deadline was set for the completion of these talks.
U.S. Transportation Secretary Mary Peters noted that the deal will eventually boost China service by U.S. airlines from the current 10 daily flights to 23. She said the goal set at the December SED meeting was to announce meaningful progress by the May meeting, and "we have [made] more than progress... we have achieved a breakthrough agreement."
DOT officials said the department will begin the award process as soon as possible for the 2007 new-entrant designation and single daily flight -- which would be available from the end of August. DOT is "looking for an accelerated process" for this award, although some sources are skeptical there is enough time for a new entrant to set up a flight by August.
Delta appears to be the most likely short-term winner in the new agreement. The airline is regarded as having the inside track for this year's new-entrant designation and the single daily flight. Delta applauded DOT for achieving the deal, and said it would apply to launch Atlanta-Shanghai service.
United is favored to win the Guangzhou flights next year, and US Airways is considered most likely to win the 2009 new-entrant designation and daily flight. Under this scenario, the other three 2009 flights would go to Northwest, American and Continental.
During the last round of applications -- won by United with its Washington Dulles-Beijing service -- our offices were inundated with press releases, calls and experts wanting to weigh in on why INSERT AIRLINE HERE - literally - should win the new service. At one point, we actually had to stop writing about the issue, because we were being bombarded by one airline in particular that shall go unnamed.
For those of you who might not remember, in the last round we had the following carriers competing for new China service: United Airlines, Dulles-Beijing; Northwest Airlines, Detroit-Shanghai; Continental Airlines, Newark-Shanghai; and American Airlines, Dallas/Fort Worth-Beijing. Conventional wisdom had American winning that round, but a last-minute change by the carrier to offer one-stop service through Chicago on one leg of the trip -- prompted by unresolved pilot work rules -- effectively scuttled the carrier's bid.
Taking the airport angle of this story, DFW Airport was by far the most aggressive in pushing for American's bid to Beijing, offering financial studies and a special incentive program for the carrier if it got the service. While the other carriers also got support from their airport partners, none were as openly aggressive as DFW.
So now the battle for the new frequencies begins in earnest, despite the DOT not announcing any opening date for the lone 2008 frequency. In this round, we have Delta going for Atlanta-Shanghai; Continental going for Newark-Shanghai again; and American, DFW-Beijing again; and Northwest is mulling Detroit-Shanghai, Detroit-Beijing and Minneapolis-Shanghai. Hawaiian Airlines has also announced plans to go after China service, although it has yet to specify city-pairs, while US Airways will wait until 2009 to go after Philadelphia-Shanghai service.
The May 25 issue of Aviation Daily includes a follow-up story (subscribers only) by Mr. Schofield on how U.S. airlines are already looking at how they can take advantage of the new U.S. China aviation deal, and are eyeing still-scarce flights that will be available through 2009. The agreement allows a new U.S. carrier to be designated for the China market this year, as well as a single daily flight that will likely go to this new entrant. These rights were previously scheduled to be awarded in 2008. The next new-entrant opportunity would be in 2009.
Aside from the new-entrant designations and flights, the supply of flights is still tight for incumbents through 2009. Incumbents can apply for a daily Guangzhou flight in 2008, three daily flights in 2009, three in 2010, two each in 2011 and 2012. All but the 2008 awards are for Beijing and Shanghai.