HONG KONG HAS agreed to Taiwan's demand that two airlines from each country can serve the lucrative route between the two.

The two sides have been wrangling for months over the opening up of competition between the two destinations.

The previous agreement expired at the end of April 1995. Taiwan, a paragon of deregulation with two strong international carriers and seven domestic airlines, has insisted that the route be opened up.

Three major points were agreed on 31 July, according to Taiwan's Civil Aeronautics Administration (CAA). The new agreement, beginning on 30 October, will last for five years, extending beyond the 1997 return of the UK colony to China. Each side can nominate two airlines, with Cathay Pacific and China Airlines keeping their existing frequencies.

Cathay flies 110 flights a week -21 to Kaohsiumg and the rest to Taipei - while CAL flies 109.The issue of additional frequencies remains unresolved. Cathay has proposed another 14 flights a week by each country's second airline, a number, which the CAA says is unacceptable.

Dragonair is expected to be the second carrier from Hong Kong. Eva Airways, which has been lobbying for the route and has strong government connections, is expected to fly from Taiwan.

Source: Flight International