Houston Community News >> Airlines Wants Routes to China

9/13/2006-- To try to get to China, Continental Airlines went through Chinatown. In coming months the Transportation Department will choose from among four U.S. carriers to award a single new nonstop route to China. Nonstop routes anywhere in Asia are a rare and valuable commodity - something the cash-strapped airline industry needs more than ever.

To build support, the airlines are enlisting travelers to sign petitions on their Web sites. Elk Grove Village, Ill.-based United Airlines is asking employees to write to lawmakers and the Transportation Department.

Continental officials held a news conference in New York's Chinatown last week and lined up support from the Chinese-American community. Spokeswoman Mary Clark said Continental has collected 15,000 letters and more than 8,000 online petition responses.

"This is going to be a very lucrative piece of business, and it behooves all the carriers to improve their shot at getting it," said Sam Peltzman, an economist who specializes in airlines and regulatory issues at the University of Chicago, who was involved in United's purchase of Pan Am's Pacific routes in 1985.

"Everybody wants to get these things. It's much better to be in a market where you don't attract a lot of competition," especially from discount carriers, Peltzman said. "Southwest Airlines isn't going to fly that route."

To add a domestic route, airlines need to do little more than find a free gate. But adding international routes into regulated markets such as China can be far trickier. Those governments limit the number of landing slots because of busy airports and a desire to protect domestic airlines from competition. But it's worth the hassle for airlines because higher-paying business travelers fill the seats.

Northwest Airlines Corp. and UAL Corp.'s United dominate U.S. service to Asia and are looking to expand it. Northwest wants to fly from Detroit to Shanghai, and United is proposing Washington, D.C. to Beijing. AMR Corp.'s American Airlines would serve Beijing from Dallas, and Continental Airlines Inc. wants to serve Shanghai from Newark, which attracts many New York-area travelers.

American and Continental are both eager to expand their flights to Asia; American added its first flight to China earlier this year. Continental flies from Newark to Beijing daily and from Newark to Hong Kong six days a week.

Airlines generally don't say how profitable individual routes are. But bankrupt Northwest pledged its Pacific routes as collateral on its proposed debtor-in-possession loan for up to $1.375 billion.

"Fares to China, even accounting for distance, tend to be dramatically higher than fares to just about any other market in the world," said Alan Bender, an airline economist at Embry-Riddle Aeronautical University in Daytona Beach, Fla. And business travelers are more likely to pay for upgrades to business class or first class on longer flights, he said. "Companies don't want their frequent business travelers going on 15-hour flights and being unable to function when they get to the destination," he said.

In Chinatown, Continental officials argued that the New York area has a larger Chinese-American population than other proposed departure cities. Northwest said its Detroit hub would connect more cities - 120 - to China. United said its proposal would provide the only nonstop between the U.S. and Chinese capitals. American said its route would be the first to leave from a Southern U.S. city.

(Contributed by AP)