Landmark US-China air pact to boost international trade
FedEx, UPS and American Airlines have welcomed the bilateral aviation agreement between the US and China, which extends through 2010, and provides 111 new weekly US-China flights for US cargo airlines.
(6/21/2004)
The US DoT will be responsible for allocating the new flights, the first of which will be available in August.
The new agreement contains a key provision that allows US cargo carriers to establish hubs in China once specific criteria are met. The agreement also includes provisions for a 500% increase in cargo capacity between the two countries and underscores the increasing globalisation of commerce and benefits of bilateral trade.
UPS said that the agreement will provide significant opportunity for the company to grow its business in the region, not only between the US and China, but also within Asia and between China and other parts of the world. The agreement permits UPS to connect China and Japan with direct air service, one of the largest and fastest growing trade lanes in the world.
UPS Chairman and CEO Mike Eskew applauded the landmark agreement, noting that it “will accelerate the flow of goods into and out of China, providing substantial benefits to American workers, businesses and consumers.”
UPS began its operations in Asia in 1988, and introduced direct air service to China in 2001. UPS has experienced double digit growth in the US-China market in each of the last three years, and its current flights between China and the US are operating at near capacity. Last year, UPS took an ownership position in Sinotrans and also became the first foreign carrier to form a partnership with a domestic Chinese air carrier, Yangtze River Express.
Michael Ducker, executive vice president, International for FedEx Express, said: “This marks a big step for China in sustaining its robust economic development by establishing stronger international trading links. These new flights will greatly enhance the ability to connect customers all over the world with the dynamic Chinese marketplace.”
US exports to China have grown by 75% over the last three years making the United States second only to Japan as China's top trading partner. FedEx volumes from Asia grew by 22% in the fiscal third quarter with China volumes up 55% year-on-year.
FedEx entered the China market in 1984, and has expanded its guaranteed service to cover more than 220 Chinese cities, with plans to add another 100 cities in the next few years. FedEx is also looking at hub expansion opportunities in Asia, including consideration of the new Guangzhou Baiyun International Airport. If awarded additional authorities, FedEx plans to initiate new round-the-world flights connecting China to businesses and nations in Europe, North and South America and Asia. FedEx will also explore the addition of air service to new Chinese cities along with more frequent flights to the FedEx AsiaOne network in Subic Bay, the Philippines and the FedEx EuroOne network based in Paris.
Gerard Arpey, chairman & CEO of American Airlines, said: “Although American's opportunities to compete in key Asian markets outside Japan have been limited by governmental restrictions, our aspirations in the region have been high. Through partnerships with Cathay Pacific, a fellow member of the global oneworld alliance, and with Japan Airlines, China Eastern, Vietnam Airlines and EVA Airlines, we have been able to broaden our reach in the trans-Pacific market. But American will be able to offer our customers so much more in this growing and ever-important market once we are able to operate directly between the US and China.”
He added that the last time US-China route authority was available, American was an aggressive participant in the carrier selection proceeding, and was deeply disappointed when the designation went to an all-cargo airline. “This time, “ he said, “new route authorities will be available for combination carriers like American, and we will again make a strong case for operating the new route from our international gateway at Chicago's O'Hare Airport with non-stop Boeing 777 service to Shanghai
