China and the United States signed a landmark pact on Saturday to expand air services between them.
The agreement increases the number of weekly flights by nearly five fold over the next six years, from the current limit of 54 round trip flights to 249.
Carriers will be permitted to fly to any city in the other country, with unlimited code-sharing between US and Chinese airlines. Previously US carriers were restricted to flying to five Chinese cities and the Chinese could arrive at only 12 US destinations.
The benefits consumers and US air carriers will reap from this agreement are both obvious and substantial.
More flights will help quash complaints from air travelers about limited choices.
Northwest Airlines, just awarded the right to conduct business in China, will operate a new daily flight from Detroit to Guangzhou in south China's Guangdong Province, becoming the first US carrier to offer passenger service to the city.
Intensified competition, one of the predictable scenarios after the pact is gradually implemented, could also lead to lower fares and improved services.
For US aviation-related companies, which have become leaders in the international travel business thanks to their financial strength and comprehensive service network, the agreement provides more room in the virtually "open skies."
The more open the market, the more advantaged the stronger power becomes.
For the Chinese side, opening up the market, while abiding by the World Trade Organization principles, puts heightened pressure on domestic airlines.
For example, domestic companies have a total of fewer than 20 all-cargo carriers on international routes while the United Parcel Service of America alone owns more than 600. They will not compete on an equal footing.
Domestic airlines are reportedly negotiating to purchase more carriers. But that will further worsen their vulnerability by hiking their assets/liabilities ratio, which already stands at more than 50 percent.
(China Daily July 27, 2004)
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