Airlines Fight For Lucrative Flights To China

In what has become a dogfight, American, Continental, United and Northwest all claim to be the best carrier for seven new weekly passenger flights to China.

The flights will open next year as part of a 2004 U.S.-China deal. The Transportation Department could decide before the end of the year.

Why all the fuss? China restricts foreign carriers and flights, so competition for new slots is intense.

Most other overseas flights operate under "open sky" pacts, aviation's version of a free-trade deal.

Everybody Wants China

And, it's China. "There's so much commerce back and forth there is a demand that is not being met," said Tim Wagner, a spokesman for AMR Corp.'s American Airlines.

The airlines covet the limited routes in a fast-growing air market. Airlines say their China business is strong, but they don't break out results. International flights are known to be more profitable than domestic routes.

United, a unit of UAL Corp., said its flights to Beijing and Shanghai from Chicago and San Francisco are more than 80% full. It's the U.S. leader in the China market.

Continental spokesman David Messing said premium BusinessFirst seats on its 16-hour Newark, N.J.-Beijing flights often sell out. "It's a good route for us," Messing said. "There's a huge local market of people who want to travel between New York and Beijing."

Continental, which began Beijing service in 2005, wants to add Shanghai flights from Newark.

Before the U.S.-China deal was signed, just 54 flights a week were allotted to U.S. carriers, and over half were for cargo. The total will rise gradually to 249 by 2010.

Cargo allotments are rising faster than those for passenger flights, enough to satisfy freight carriers so they don't have to fight for spots.

FedEx, Polar Air Cargo and Northwest each recently won four new cargo flights to start in the spring -- just what they wanted.

Passenger carriers' rivalry has been particularly intense this year.

Each airline summed up its case in volumes of documents, along with endorsements and petitions from citizens, politicians, government officials and interest groups.

Continental said it got more than 110,000 signatures of support.

American, which began Chicago-Shanghai flights in April, said over 120,000 people registered on flytochinaonaa.com for a proposed Dallas/Fort Worth to Beijing route.

American criticized United for an "unprecedented" and "extravagant" campaign for the first nonstop flights between the capitals of Washington and Beijing.

In seeking to join the two financial capitals -- New York and Shanghai -- Continental said commerce should trump politics.

If back-and-forth barbs among carriers weren't enough, China has even been used as leverage in internal labor relations. Pilots said they wouldn't back American's China bid unless management made concessions in new labor talks.

American said no: China-related issues such as work hours on long flights should be "decoupled" from other broader demands.

The four carriers are the only U.S. passenger airlines permitted to fly to China. The Transportation Department rejected an earlier bid by Delta to link Atlanta and Beijing. But in 2008 a new carrier will be allowed in, provided the department approves.

Airlines Fault Rival Carriers

United and Northwest have been flying to China a lot longer than American and Continental. United opponents say its "monopolistic" hold on the U.S.-China market, which began 20 years ago, should end to foster more competition.

American said a Texas gateway to China would save passengers in the South and Southwest from having to travel to the north. Also, China is the state's largest trade partner.

Meantime, bankrupt Northwest wants nonstop Detroit-Shanghai flights. It said Detroit is the "most effective hub gateway to China" for those in the East. Its China flights are indirect via Tokyo.

"Now they want Detroit," American's Wagner said. "Don't ask me why, because we don't understand."

The Transportation Department said it'll largely award the flights based on its main objective -- "to maximize the public benefits."

American and Continental say their proposed routes would benefit more of the public than United's because they would serve larger markets than Washington.

United doesn't see it that way. "I never saw anybody with a straight face suggest that Dallas is larger than Washington," said Michael Whitaker, United's VP of international and regulatory affairs.

Continental CEO Lawrence Kellner testified that United already has authority to fly to China from Washington. It need only change one of its existing routes, he said.

United's Whitaker said it would be absurd to switch out of a "high demand" market -- Chicago or San Francisco -- "to fund a new one."

The squabbling isn't likely to end yet. The Transportation Department first plans to make a "tentative decision," said spokesman Bill Mosley, which will give time for the parties "to show cause why the award shouldn't be final."

Will all opposed to the choice raise their hand?



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