China has lifted flight restrictions on 49 of the 56 mainland cities with air links to Hong Kong.

In addition, a new agreement signed with India will allow 40 flights weekly between Hong Kong and cities in that country.

Under a memorandum of understanding signed between the Transport and Housing Bureau of Hong Kong SAR Government and the General Administration of Civil Aviation of China (CAAC) on December 21, operation and capacity restrictions on 49 of the 56 routes will be lifted from the end of March.

The remaining seven routes - Beijing, Shanghai, Guangzhou, Shenzhen, Kunming, Dalian and Chengdu - will allow three airlines to operate passenger/all-cargo services and two airlines for all-cargo services only, also by the end of March 2008.

These will increase to four and three airlines respectively by 2009.

The bureau did not reveal how many new flights there will be under the new arrangement, but said the surge was welcomed by airlines and viewed as adding competitiveness to the industry.

Cathay Pacific and Dragonair dominate flights from Hong Kong to the mainland.

Cathay currently has seven flights weekly to both Shanghai and Beijing and two to Xiamen. Dragonair, a Cathay subsidiary, flies to 21 mainland cities, including Beijing and Shanghai.

The bureau dismissed speculation the two leading airlines had an edge over budget airlines in expanding services to the mainland, saying consideration was based on whether any airline could advance Hong Kong's status as an air hub.

Though the bureau said no airline would be given preference, priority will be given to the number of flights an airline would have. "To have more than one flight per day is more flexible and more attractive to travelers, in case of delays or typhoons," the bureau said.

The new air services agreement with India was signed on December 18. Currently, two airlines operate 20 flights per week between Hong Kong and New Delhi and Mumbai - eight by Cathay and 12 by Air India.

Tourists can also travel from Hong Kong to two new destinations: Bangalore, the country's high-tech hub, and Chennai, the fourth-largest metropolitan city, in southeast India.

In addition, India's airlines can operate services to North American cities via Hong Kong, while airlines from Hong Kong can fly to European cities via India.

Dragonair chief executive officer Kenny Tang welcomed the development, saying it will allow the expansion of the airline's services to the mainland.

Cathay welcomed the opportunities to expand its network to the mainland and India.

Travel Industry Council executive director Joseph Tung Yiu-chung said more competition in the mainland airline market will lead to more choices and cheaper ticket prices for travelers which, in turn, will boost tourism.

He welcomed the increase of flight services to India, adding there had been a 10 percent rise in the number of Indian tourists arriving in Hong Kong annually. Also in recent years more Hong Kong people have opted to visit India.

Hong Kong Tourism Board chairman James Tien Pei-chun said the new aviation development would further strengthen Hong Kong's status as an international aviation hub.