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There were smiles from both sides when China and the United States reached agreement in May on the future of aviation routes between the two countries.

 

Announced during high-level talks between China's Vice Premier Wu Yi and US Treasury Secretary Henry Paulson, the new deal promised to more than double by 2012 the daily non-stop flights between the countries.

 

Carriers from both countries would have the option of increasing the number of daily flights they operate from the current 10 to 23.

 

China's top civil aviation official, Yang Yuanyuan, called on Chinese airlines to "seize the opportunity" to grow their China-US business. US Transportation Secretary Mary Peters, in turn, said she expected US carriers' revenues to rise by US$5 billion as a direct result of the new flights.

 

Two months on, a survey of how aviation players are reacting on both sides of the Pacific reveals two starkly contrasting realities. While American carriers are engaged in a fierce bidding war for the new flights in a market that has grown 12.5 percent a year since 2000, their Chinese counterparts are doing nothing more than sitting and watching.

 

Profit split

 

"If an airline is profitable, it will definitely look to increase flights or destinations," said Ma Ying, aviation analyst with Haitong Securities. According to Ma, this contrast shows the US carriers were making good profits on the present routes, while the Chinese ones were not.

 

All six major passenger airlines in the US announced the routes they were applying for before the July 16 deadline set by the US Department of Transportation, which will decide by August whom to award the flights to.

 

Up for grabs in this round of bidding are the six flights that will become available over three years - one this year, one in 2008, and four in 2009.

 

Analysts say winning any one flight could mean a US$100 million bump in annual revenues for a US carrier.

 

It is an understanding of what is at stake that is fueling the public campaigns by the six airlines to win support for their applications. No trick in the book is being left unused.

 

Atlanta-based Delta Airlines, which wants to become the first US carrier to fly from the southeast US to China, has set up a Website (www.nextgatewaytochina.com) to support its application to serve Shanghai in 2007 and Beijing in 2009.

 

It is claiming the endorsements of 12 governors, two US senators, 10 US representatives, and three pandas - Lun Lun, Yang Yang, and Mei Lan - on loan at the Atlanta zoo from Chengdu.

 

Delta confident

 

Delta is widely expected to win the 2007 slot because the US transport department has said it is likely to award this year's flight to an airline that does not presently fly to China. "We are confident we have the strongest case," Delta spokesman Kent Landers told Shanghai Daily.

 

Meanwhile, American Airlines has collected 80,000 public signatures on an online petition to support its bid to fly from Chicago to Beijing in 2009.

 

Northwest Airlines, eager to differentiate its proposed service from those of its competitors, has promised to be the only airline to use the new Boeing 787 Dreamliners on its Detroit-Beijing bid for 2009.

 

"It's a brand new aircraft that will be popular with travelers," said spokesman Dean Breest. "It has a pressurized cabin with more oxygen and more humidity, so customers will feel better on a long-haul flight."

 

Continental Airlines and US Airways want to fly non-stop from Newark, New Jersey, and Philadelphia respectively.

 

United Airlines, which already flies five daily flights to China and is the biggest operator, has applied to fly from Los Angeles to Shanghai and San Francisco to Guangzhou. Its 2008 Guangzhou bid looks set to go through as no other airline has applied to fly there.

 

In comparison with the excitement in the US, airlines on the Chinese side of the Pacific are looking decidedly passive.

 

Ji Lijun, an analyst at Shanghai Securities, called the increase in flights "useless" for Chinese airlines, noting that the existing slots available to them have yet to be used.

 

"Airlines here are still making their evaluations on possible new destinations to fly to," said Huang Bin, company secretary of Air China, the dominant Chinese operator of Sino-US flights. He acknowledged that Chinese airlines were doing worse than their American counterparts on the flights, which is the reason for the lack of interest in expansion.

 

Huang accounts for the relatively poor performance of Chinese carriers on the make-up of passengers. "US airlines are attracting more business travelers, who will pay to fly business and first class, than Chinese airlines are. That is why they show better profitability, even if we carry the same number of travelers."

 

Air China, which flies non-stop to San Francisco, Los Angeles and New York, has not been making profits on its US flights, but hopes to break even this year. China Eastern and China Southern, the other two airlines operating flights to the US, are both losing money, say analysts.

 

Ma added that travelers were more likely to pick airlines from their home countries, and there were more US travelers coming to China than Chinese going to the US at the moment. "Furthermore, the perception that Chinese airlines provide poorer service will take time to change."

 

Aviation deal to double direct flights

 

China and the United States struck a new aviation accord on May 23 to more than double the number of direct flights between the two countries over the next five years.

 

Announced during Vice Premier Wu Yi's visit to Washington DC, the deal allows US carriers to run 23 direct roundtrip flights to Beijing, Shanghai and Guangzhou by 2012, up from the present 10.

 

One new flight can be added this year, one new flight in 2008, four in 2009, three in 2010, and two each in 2011 and 2012. The new flight for 2008 must fly to Guangzhou.

 

In addition, Us transport authorities can introduce three new airlines to operate the flights, including one cargo airline. Of the six major passenger airlines in the US, only Delta and US Airways currently do not have direct flights to China. Chinese airlines can fly the same number of flights, and can introduce an unlimited number of airlines.

 

(Shanghai Daily July 25, 2007)