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U.S., China Commit to Far-Reaching Aviation Agreement


Landmark accord promises substantial expansion of air servicesJune 18, 2004

The United States and China have reached a landmark agreement promising a substantial expansion of commercial aviation services between the two countries, according to a June 18 press release from the U.S. Department of Transportation.

"This agreement recognizes the critical role of commercial aviation in the rapidly growing U.S.-China trade relationship," said Secretary of Transportation Norman Y. Mineta.

Mineta pointed out that annual trade between the two countries has increased from $4.8 billion in 1970 to $170 billion in 2003.

Under the accord, five additional airlines from each country will be allowed to serve the U.S.-China market. The new entrants, carrying cargo or passengers, will be phased into the market gradually over a period of six years, starting in late 2004. The number of weekly flights for each side will increase by 195 -- 111 by all-cargo carriers and 84 by passenger airlines -- resulting in a total of 249 weekly flights for each side at the end of the phase-in period.

The agreement also provides for greater operational flexibility. Restrictions on where carriers may land will be lifted, and each country's carriers will be allowed to serve any city in the other country. Currently, U.S. carriers are allowed to fly to only five Chinese cities and Chinese carriers to only 12 American cities. Unlimited code-sharing will be allowed under the agreement, and charter opportunities will be expanded. Carriers from both countries will be allowed to establish cargo hubs.

Formal signing of the agreement is expected within the next month, but the terms take effect immediately.

Following is the text of the press release:
(begin text)
Department of Transportation 90-04
Contact: Bill Mosley
Tel.: (202) 366-4570
Friday, June 18, 2004

United States, China Reach Agreement On Expanded Air Services

U.S. Transportation Secretary Norman Y. Mineta today announced a landmark air services agreement between the United States and China that will more than double the number of U.S. airlines that may serve China and will permit a nearly five-fold increase in weekly flights between the two countries over the next six years. The agreement will also substantially increase the "doing business" freedoms of U.S. carriers in China, including the right for U.S. cargo airlines to establish hubs in China. The agreement was reached in Washington, D.C. after four rounds of talks starting last February.

"This agreement recognizes the critical role of commercial aviation in the rapidly growing U.S.-China trade relationship," Secretary Mineta said. "This agreement represents a giant step forward in creating an international air transportation system that meets the needs of the new global marketplace."

Secretary Mineta noted that even as U.S.-China aviation services have remained limited, trade between the two countries has grown dramatically, increasing in value from $4.8 billion in 1980 to $170 billion in 2003. The United States is China's largest export destination, and China is the United States' fastest-growing export market.

The last agreement to expand U.S.-China air services was concluded in April 1999, when each country's carriers were allowed to increase their weekly flights in the market from 27 to 54, and each side was allowed to designate one additional airline --- for a total of four --- to serve the market.

Today's agreement will allow five additional airlines from each country to serve the U.S.-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. United Airlines, Northwest Airlines, Federal Express and United Parcel Service currently serve China.

The agreement also 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. A total of 14 of these flights will be available for new U.S. passenger services later this year.

The two sides also agreed to allow each country's carriers to serve any city in the other country. Currently, Chinese carriers are limited to 12 U.S. cities, and U.S. passenger carriers may fly to only five Chinese cities. The agreement also will permit unlimited code-sharing between U.S. and Chinese airlines, thus expanding on the current agreement, which allows code-sharing only to a limited number of cities.

The agreement also provides that when carriers establish cargo hubs in the other country, they will be afforded a high degree of operating flexibility, and expands charter opportunities beyond those provided by the existing agreement.

The two sides will resume talks in 2006 to review the aviation relationship and make further progress on liberalizing the agreement.

While the terms of the agreement take effect immediately, formal signing of the agreement is expected within the next month.

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