Hong Kong, U.S. agree to flight expansion

By Dirk Beveridge
Associated Press

HONG KONG — The United States and Hong Kong agreed early yesterday to give one another's airlines more rights to fly in and out of each place — including a code-share arrangement for Cathay Pacific Airways and American Airlines.

The deal that was several years in the making will eliminate restrictions on the U.S. cities that can be served by Cathay, Hong Kong's de facto carrier, while giving U.S. airlines — both passenger carriers and cargo companies — more rights to fly into Hong Kong and then on to other points.

The package falls short of the so-called "open skies" pacts America has reached elsewhere, but it "will dramatically expand opportunities for the airlines of both sides and provide important benefits for consumers, shippers and communities," said Susan N. Stevenson, a U.S. consular spokeswoman here.

Hong Kong had indicated from the start it would not go along with an "open skies" deal pushed by Washington. Critics say such arrangements have been unfairly tilted toward U.S. airline interests.

Stephen Ip, Hong Kong's Secretary for Economic Development and Labor, said the package will "further expand Hong Kong's air services network; provide new business opportunities for Hong Kong airlines and further strengthen Hong Kong's status as an aviation and logistics hub."

Cathay has long sought to put its own flight numbers on services offered in the United States by its alliance partner American Airlines — a practice known in the industry as code-sharing.

The two have previously cooperated more loosely, for example by allowing one another's frequent fliers to get and spend miles on both airlines as part of the global oneworld alliance with other carriers including British Airways and Australia's Qantas.

The deal will allow Cathay to sell seats on American flights into U.S. cities beyond its international gateways such as San Francisco — services it cannot operate with its own jets and crews because of U.S. regulations.

"It's an extremely positive development for travelers between the United States and Hong Kong and Asia," said Al Becker, a spokesman for American at its headquarters in Fort Worth, Texas.

American does not fly to Hong Kong, but its biggest rival, United Airlines, has services between Hong Kong and the United States.

Currently there are no direct flights between Hong Kong and Hawai'i. Travelers now typically go through Taipei, Tokyo, Osaka, Guam or other cities. Any direct service could spur tourist business. An estimated 50,000 to 80,000 people from Hong Kong travel to Hawaii a year.

There was no indication about how many flights Cathay and American would be allowed to use their code-share on.

The U.S. negotiators got more rights for U.S. carriers — both passenger airlines and cargo companies — to fly into Hong Kong and then on to points in other markets, posing a potentially strong competitive threat to Cathay and Hong Kong's No. 2 carrier, Dragonair.

Cathay said it was disappointed by that part of the deal, which spokeswoman Lisa Wong called a "clear, unbalanced exchange" that favored U.S. airlines because Washington did not give Hong Kong's airlines equal access to the U.S. market.