US airlines jostle for China routes
The Peninsula | Mar. 30, 2006
After a 14-year wait to get into the world's most populous country, American Airlines is understandably eager to start flying from Chicago to Shanghai.
AMR Corp's American Airlines, which set up a Beijing office more than a decade ago in a bid to build relationships, on Sunday is scheduled to start flying up to 245 passengers a day to the fast-growing US trading partner.
American expects to fill an average of 86 per cent of available seats on its Chicago-to-Shanghai flights, a load factor that should allow it to turn a healthy profit on the route.
"China is the last and most important aviation global market," said Julius Maldutis, head of consulting firm Aviation Dynamics.
But the glass remains half empty for American and other US carriers that have been granted limited access to the lucrative Chinese market. Limited flying rights available starting in 2007 will be fiercely contested by rivals like Continental Airlines and UAL Corp.'s United Airlines.
Profitable international routes are crucial to US carriers' efforts to climb back to profitability after years of surging fuel costs and increased competition from low-cost carriers on domestic routes knocked them deeply into the red.
The US and China are set to hold aviation market liberalization talks next month, and U.S. airlines will be there to press their case for allowing more flights, sooner.
"There's keen industry interest, that's for sure," said a US government official familiar with the talks, to be held in Beijing April 19 and 20.
But Chinese carriers, who have billions of dollars in jets on order from Boeing Co and European archrival Airbus, are just as intent on keeping the status quo.
A well-informed source at China Eastern Airlines Corp Ltd said that the country's top three carriers have sent letters to the General Administration of Civil Aviation of China (CAAC) strongly opposing the open skies scheme advocated by their American counterparts.