Revising China Route Could Hurt American

The U.S. Department of Transportation said Monday that it will give airlines until the end of this week to debate American Airlines Inc.'s request to change its application for a China route.

But American's revised proposal for a route that connects Dallas/Fort Worth International Airport and Beijing is probably dead on arrival, industry observers said.

"I view this as a withdrawal," said industry consultant Jon Ash, president of InterVISTAS-ga2 Consulting Inc.

On Friday, American asked the Transportation Department to let it modify its request for service between D/FW and Beijing by adding a stop in Chicago. The return trip from Beijing to D/FW would be nonstop.

American had to add the Chicago stop because the trip from D/FW to Beijing would exceed the time on duty allowed in American's contract with its pilots, represented by the Allied Pilots Association.

Union negotiators last month presented the company with a list of items they wanted before they would agree to extend the duty periods. American, which didn't grant any of the demands, said the items were best addressed in regular contract talks.

Transportation officials gave interested parties until Wednesday to answer American's request to change its application and a motion by Northwest Airlines Inc. to deny American's request. Replies to those answers are due by Friday.

The department said that in seeking comment, "we are taking no position as to whether we will grant the motion."

Mr. Ash said the addition of the Chicago stop probably puts American's application behind route proposals from Continental Airlines Inc., United Airlines Inc. and Northwest.

"I'd suppose there's one chance in 50 or 100," Mr. Ash said. "I thought they were the front runner. I had their chances as maybe one in three or four. I think they've taken themselves out of play. Not only do we not need more one-stops or one-stop connections, but we certainly don't need parallel Chicago nonstops."

Mr. Ash was referring to existing nonstop service offered by United between Chicago and Beijing.

Airline analyst Alan Sbarra of Roach & Sbarra Consulting said American's proposal is weaker because it adds a stop for everyone except those in Chicago, and it duplicates United's service.

However, the Transportation Department will be weighing many factors, including what routes provide the most benefits to consumers and best spurs competition, he said.

Transportation officials "may say, 'We'd like to give it to American because we want a different airline to add more competition to the market,'" Mr. Sbarra said.

American spokeswoman Mary Frances Fagan said the carrier's proposal, even with the stop, "still will have the best opportunity to provide service to the greatest number of shippers and passengers as well to provide competition in a market that has long been dominated by two carriers in particular," referring to United and Northwest.

Representatives for American and the union said there are no plans to bring the China issue back up in negotiations.

"Management's decision to amend the airline's application negates the need for an agreement with APA," union spokesman Gregg Overman said. "That's the net effect."

Mr. Sbarra said the stalemate between the pilots and American is a preview of coming attractions as airlines start making money after a long period of union concessions and industry losses.

"This is the beginning of the next round of negotiations," Mr. Sbarra said.

"Labor wants back what it gave up."

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