U.S. Carriers Vying for China Route Let Mud Fly

Politicians find their lives scrutinized when they run for office. Airlines can find what's wrong with their pasts by applying for international routes.

That's the situation now as American Airlines Inc., Northwest Airlines Inc., Continental Airlines Inc. and United Airlines Inc. vie for the right to fly from a U.S. city to a China city.

It's the nature of airlines to spend time trash-talking about their competitor's applications, even as they extol the virtues of their own.

You won't read in the applications of American, United and Northwest that they've had to pull out of a number of Asian routes. But you can certainly find out about the withdrawals in Continental's application.

Continental spells out the five Asian routes abandoned by American, five given up by United and 11 left by Northwest since 1996. Continental notes that American is withdrawing in November from a route between Dallas/Fort Worth and Osaka, Japan, and that the carrier never used its right to fly between D/FW and Hong Kong.

"Until Dallas/Fort Worth traffic grows to levels sufficient to support nonstop service, scarce China frequencies should not be squandered on a market in which very few nonstop passengers would benefit," Continental chairman and chief executive Lawrence W. Kellner wrote in his airline's application.

American's perspective

American's chairman and CEO, Gerard Arpey, dismisses the give-and-take that goes on in the lengthy documents submitted by the carriers, and he defends American's decision to pull out of D/FW-Osaka as well as other routes.

"I think that's typical of the rhetoric you hear in these route applications," Mr. Arpey said last week. "The reality is that a number of carriers have pulled back in Asia this year."

He cited United's decision to leave the New York-Tokyo market in 2006, and Northwest's pullback on Asian flying.

"The bottom line: You have to make money flying these airplanes," Mr. Arpey said. "I don't think that's a reflection on our commitment to Asia."

American wants to begin flying from D/FW to Shanghai; Continental is seeking Newark-Shanghai rights; United wants to link Washington, D.C., to Beijing; and Northwest has applied for a Detroit-Beijing route.

It's up to the U.S. Department of Transportation to weigh the arguments. With service scheduled to begin in late March, the airlines expect agency officials to announce a decision by the end of 2006.

To woo the decision makers, each carrier has adopted a theme to guide the government's thinking.

American focuses on the fact that it would offer convenient one-stop connections to much of the southern half of the United States, saying that its service would reach 32 states and 78 percent of the U.S. population.

The Transportation Department shouldn't pick Northwest and United because those two already dominate U.S.-China service, American says, and shouldn't pick Continental because John F. Kennedy International Airport in New York and Newark in New Jersey already offer flights to China.

Competitors' views

Continental's argument is that the U.S. government should pick the route that can serve the most local passengers: Continental's Newark-Shanghai route.

Like American, it argues that the government shouldn't give more routes to United and Northwest. However, unlike American, Continental doesn't think the D/FW market is big enough to justify a China route. Continental's application refers to the D/FW-Beijing market as minuscule.

United is focusing on the "capital-to-capital" angle, touting that its Washington-Beijing would be the first service between the U.S. and Chinese capitals. United says the metro Washington area is the largest U.S. market without China service, and the Washington-Beijing route is the largest U.S.-Beijing market without service.

United criticizes American's D/FW route as offering "circuitous" service for many in the eastern and central United States. While United doesn't mention the Asia routes it has abandoned, it points out to the Transportation Department that American and Northwest both have stopped service on Asian routes, saying neither carrier can "sustain service to Asia" from D/FW or Detroit, respectively.

Northwest says its Detroit hub will provide more U.S.-China connections than its competitors' connecting hubs at Newark, Washington or D/FW. The time waiting for connections will be shorter in Detroit than other airports, "especially DFW, which is absurdly circuitous for large areas of the United States," Northwest says.

Northwest says the government "should select the hub gateway that best serves the most people. On that basis, Northwest's Detroit hub wins hands down."

In its July 10 order kicking off the competition, the Transportation Department says its primary objective "will be to maximize the public benefits that will result from award of the authority in this case."

That includes the proposal that offers the "best service" and affects the market and competition "in order to promote an air transportation environment that will sustain the greatest public benefits," the department told the airlines.

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