The agreement permits five additional airlines from each country to serve the market. Presently in Asia, China Southern Airlines and Air China serve the market. U.S. carriers are FedEx, UAL, United Airlines, UPS and Northwest Airlines.
China may name a passenger or cargo airline to start service and the U.S. may name one all-cargo airline to join by year’s end. Subsequent additions will be one carrier from each country entering the market each year in 2005, 2006, 2008 and 2010. By the end of the six-year period, there will be 249 weekly flights. This includes 84 additional passenger and 111 additional cargo flights weekly.
At this time, Chinese carriers may call on only 12 U.S. cities and U.S. passenger carriers may fly only to five Chinese cities. Under the agreement, each country’s carriers may serve any city in the other country.
For carriers establishing or having established cargo hubs, a high degree of operating flexibility – previously not available – will be afforded. For example, cargo will be permitted to move between Shanghai and other Chinese cities.
Already FedEx is looking at possible expansion of its Asian hubs at the new Guangzhou Baiyun International Airport. If UPS adds a new hub in China, it expects the facility to compliment its already operational Asian hubs in Hong Kong, Taipei, Singapore and the Philippines.
Last year, China exported $152 billion to the U.S., while the U.S. exported $28 billion to China. Now the third largest U.S. trading partner – after Canada and Mexico – the U.S. – China cargo market is projected to grow at an 11% annual rate through 2022.