The landmark Sino-US aviation market-liberalizing accord, which is to be officially sealed later this month in Beijing, will open immediately the cargo air transportation sector and major market players are gearing up to claim a piece of the market.
"New China service is needed immediately because travel demand in this market is at record levels. The new agreement represents more liberalized air services between the two nations and will benefit travelers as well as cargo transporters in both countries,'' Scott Dolan, president of United Cargo and senior vice-president of American giant carrier United Airlines (United) said last week.
United is now busy preparing to launch a new non-stop daily service between
Shanghai and Chicago beginning from October 31, which is subject to US government approval.
United's cargo capacity to and from China will increase 33 per cent when the new service launches.
"Our new Beijing-San Francisco non-stop flights have added much welcomed cargo capacity on routes between the US and China. And our plan on the new service to
Shanghai from Chicago will further expand our cargo operation, utilizing the belly of our aircraft and meeting the growing demand,'' Dolan said.
Dolan was appointed the role recently by UAL Corporation, parent of United.
The US aviation giant has already filed an application to the US Department of Transportation to launch a new non-stop daily service between
Shanghai and Chicago beginning October 31.
As a leading carrier providing extensive service between Asia and the US, United believes the new pact will bring in more opportunities and looks forward to expanding their service to meet the needs.
"We have seen an increase in cargo volume from China and the Pacific region in recent years and we anticipate the trend will continue to grow,'' Dolan said.
"However, United Cargo's major focus currently is on perfecting the reliability of our cargo operations in the US and maximizing usage in the bellies of our passenger fleet for freight shipments in international markets including Asia.''
Even though the new aviation deal offers new opportunities, Dolan indicated that United has no immediate plans to go into the freight business.
"Plans for freighters in 2003 was premature, since there is not enough time to ensure top quality service at launch ... Freighters remain part of our future vision, but it is not realistic before 2006,'' Dolan added.
Opportunities abound
The market-opening Sino-US aviation agreement was reached in Washington last month after four rounds of talks starting last February.
The official signing will be sometime in this month.
The new pact contains a key provision that allows US cargo carriers to establish hubs in China once specific criteria are met.
This will allow air express carriers, such as UPS (United Parcel Service) and FedEx, to provide the centralized transportation of goods not only between the US and China, but also within Asia, and between China, and other parts of the world.
"Businesses are realizing the importance of streamlining their supply chains and the efficient movement of goods into and out of China will be a critical area for them,'' UPS Asia-Pacific President Ken Torok said.
"This is the first aviation agreement which permits open rights for carriers which set up air hubs in China. UPS will do so at its first available opportunity.'' Torok stressed.
UPS's rival FedEx is also looking at hub expansion opportunities in Asia, including the new
GuangZhou Baiyun International Airport, says David L Cunningham, president of FedEx Asia-Pacific operation.
Last December, FedEx signed a framework agreement with the
GuangZhou Airport Authority to explore opportunities for potential future hub location in the Baiyun Airport.
The new US-China aviation deal also includes provisions for a 500 per cent increase in cargo capacity between the two countries and underscores the increasing globalization of commerce and benefits of bilateral trade.
Additionally, the new pact permits UPS to connect China and Japan with direct air service, one of the largest and fastest growing trade lanes in the world.
Although United no longer serves the Beijing-Tokyo route, the firm's new daily non-stop service between
Beijing and San Francisco provides more direct access to the US for the
Beijing cargo customer.
The aviation agreement between China and the US will allow an additional 195 weekly flights for each side -- 111 by all-cargo carriers and 84 by passenger airlines -- resulting in a total of 249 weekly flights at the end of a six-year phase-in period.
United believes a healthy competition is good for any industry and the firm hopes to go on concentrating on its business and meeting the needs of all our customers in China.
"We have seen more market opportunities in China as the country's economy has grown in recent years. We will continue to serve the cargo market in China by utilizing the bellies of our aircraft,'' United said.
To be officially signed up later this month, the new aviation pact will allow five additional airlines from each country to serve the US-China market.
The United States may name one additional all-cargo airline, while China may name either a passenger or cargo airline, to start service later this year.
The other four new-entrant airlines may be either passenger or cargo carriers, with one new carrier entering the market in each of the years 2005, 2006, 2008 and 2010.
At present, FedEx, United, Northwest Airlines and UPS are the only US carriers currently allowed to fly to China. They want to expand service into the Chinese mainland, and other carriers, notably AMR Corp's American Airlines, would like to begin offering service.
