US-China aviation talks hit stumbling block on airport access

      

AUG 13, 20153:33 PM

[BEIJING] Talks to ease limits on flights between the United States and China's gateway cities have stalled over US fears its airlines will be given less attractive time slots for take-off and landing than their Chinese rivals, people familiar with the negotiations said.

Travel demand by an increasingly affluent Chinese population is set to soar long-term, a huge business opportunity for both countries' carriers. But China's major airports are already heavily congested, limiting the potential for good slots and creating a roadblock to an aviation accord that would deepen ties between the world's two largest economies.

In exploratory talks held in May in Washington, details of which have not previously been reported, China offered to permit more flights to and from Beijing, Shanghai and Guangzhou while lowering caps for other domestic cities, US officials said.

The talks, the first in four years, ended with the US side refusing to pursue formal negotiations until China presents plans to reform what the United States calls an opaque allocation system that tends to give big Chinese state carriers the best time slots, the US officials told Reuters in a telephone interview.

A senior Chinese aviation official said the US was dragging its feet. "In the past, the Chinese side was not as enthusiastic as the Americans when it came to market liberalization because we didn't need that many flights," the source told Reuters. "But it's the other way around now." Washington has made clear the ball is in Beijing's court and is waiting for the Chinese side to respond, one person said. It has encouraged China to follow guidelines from the International Air Transport Association (IATA) to accommodate carriers despite congestion.

Officials from both countries spoke on condition of anonymity. China's aviation regulator did not respond to requests for comment.

While there is interest in a new bilateral air services pact, industry experts say an 'Open Skies' agreement, which would remove market restrictions and allow airlines to coordinate capacity and pricing if they have government approval, is likely years away.

HUGE DEMAND SEEN

Under existing agreements, Chinese passenger carriers are limited to 180 round-trip flights per week, while US passenger carriers are allotted 160 weekly round-trip flights between the United States and three of China's mega cities.

But airlines are already brushing up against these limits. The top four Chinese airlines have on average scheduled 148 round-trip flights per week from July through September this year, while their US rivals have hit 128 weekly round-trips on average, according to aviation data and analytics company OAG.

Moreover, the number of air passengers traveling to, from and within China is set to nearly triple by 2034 to some 1.3 billion, surpassing an expected 1.2 billion for the United States, according to IATA.