Air Cargo Quarterly - US carriers vie for China cargo routings

By: | at 08:00 PM | Channel(s): Air Cargo News  

By Karen E. Thuermer, AJOT
Beginning October 31, United Airlines (UAL) and Northwest Airlines (NWA) will start new daily service between the United States and China, the result of a landmark agreement between the two countries that was made official on July 23. The next time China will award additional frequencies and carriers access will be in 2005.
But air cargo carriers are also vying for their piece of the US-China pie by submitting their requests to be awarded slots, the result of the two nations initialing a protocol amending the US-PRC aviation agreement that greatly expands the opportunities for air carriers from both countries. The opportunities will be increased progressively through 2010.
According to the US Department of Transportation (USDOT), effective August 1, 2004, the US government can designate a new cargo carrier in the all-cargo market to service this trade lane. Also effective August 1, the United States has 21 additional all-cargo frequencies for all-cargo services. Effective, March 25, 2005, the United States will receive another 18 frequencies for all-cargo services.
Carrier requests
Already, US carriers have requested twice as many slots for cargo flights to China as are available under a new aviation agreement between the two countries. Among the companies submitting their request are UPS, Evergreen, Arrow Air Inc., Gemini Air Cargo Inc., and Polar Air Cargo Inc., a unit of Atlas Air Worldwide Holdings. Incumbent carriers FedEx, Northwest and UPS also submitted applications for the 2004 and 2005 frequencies. Polar Air maintains facilities at major US gateways, including New York, Los Angeles, Chicago and Miami, and extensive networks in Asia, including Tokyo-Narita and Hong Kong. In 2003, the carrier began offering round-the-world scheduled cargo service.
While no final decisions have yet been made, the USDOT did assert, “We believe that the public interest calls for prompt implementation of those rights and therefore we favor the adoption of expedited procedures to facilitate that possibility.”
American Airlines has been keeping a watchful eye on developments.
“American Airlines was disappointed that new entrants were not given those slots. Incumbents United, Northwest, and FedEx got additional frequencies for 2004,” comments Jay Shelat, American Airlines manager of alliance and interline. “For 2005, we are optimistic American will be one of the new designees to get the new frequencies to fly between the United States and China.”
American Airlines currently does not fly to China, but services that market via Tokyo and interline agreements with other carriers. What makes American unique is its frequency of connections throughout its network. Despite the cargo imbalances between Asia and the United States, American Airlines is able to work that to its advantage.
“We have to rely on other carriers to interline with us,” remarks Shelat. “As a result, we do a tremendous interline business in Asia over Honolulu.”
In Honolulu, American Airlines offers six to seven 747-400s wide bodies per day into the Mainland United States.
“There are a lot of Asian carriers that fly into Honolulu,” Shelat states. “While the imbalance is working against us, it allows us to capture some of the China-originating traffic and take it into Dallas, Chicago, Los Angeles, and beyond, particularly Latin America.”
While American will not be flying into China just yet, Shelat points out that both the Chinese and US governments agreed to allow off line carriers like American to provide 001 papers for shipments in that market.
“But before we can provide 001 papers, we need to do legal work, file a business application and go through some hoops on both sides of the governments,” he says. “On the corporate side, we are working to obtain that license. As soon as we get it, we plan to have our paper into the market before our flight actually lands, several months down the line.”
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