US cargo airlines are awaiting word from the US Department of Transportation on which of them will be allocated new frequencies to and through Hong Kong after the signing of a more liberal air services accord following three years of talks.

The new memorandum of understanding on air services allows US all-cargo carriers to operate 64 weekly flights between Hong Kong and third countries, up from eight flights previously. Rights will be phased in over a three-year period and eight US cargo carriers are fighting for rights available in the first allocation. The new deal also allows US passenger airlines to operate 28 additional weekly flights between Hong Kong and third countries, to be phased in over a two-year period.

Carriers from both sides will at the same time be allowed to fly between Hong Kong and any US city. The old air services agreement reached between Hong Kong and the USA in 1995 only allowed for services between Hong Kong and six gateways in the continental USA.

The main benefit for Hong Kong airlines will be new provisions allowing for codesharing, enabling oneworld alliance partners American Airlines and Cathay Pacific Airways to go ahead with long-standing plans to co-operate on services.

Hong Kong carriers will be able to serve 25 US cities on a codeshare basis with US airlines, phased in over two years, while airlines from both sides will have unlimited rights to codeshare on flights by third-country airlines for services between the USA and Hong Kong.

Although the US side did not get an open-skies deal as initially sought, the agreement is seen as a major boost for its airlines. Over the three years of discussions Hong Kong consistently rejected US calls for an open-skies accord but Washington eased its position in the later stages of the discussions. US officials indicate, however, that they want additional rights in future. "We will continue to seek opportunities to further liberalise air services in this important market," says transportation secretary Norm Mineta.

US airlines generally welcome the agreement. Hong Kong-based Cathay says it welcomes the new codesharing provisions, but adds that the agreement gives away too many fifth-freedom rights to US carriers. "Cathay Pacific is disappointed with the outcome of the fifth-freedom discussion, which is a clear unbalanced exchange in favour of the US carriers," it says. "The US negotiation team has achieved major success for the US carriers. We are disappointed with the US protectionism, which denies Hong Kong carriers equivalent commercial opportunities."

The new deal comes as Hong Kong International Airport stages a recovery in both cargo and passenger traffic. In October the airport handled a record breaking 251,000t of cargo, a 26.4% increase on October 2001. It also handled 3.8% more passengers in the month compared to October 2000.

Source: Airline Business