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commavia
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Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 2:36 am

Okay, okay, so these are all predictions, nothing set in stone, but it should be very interesting to see what happens in the U.S.-China routes case this year.

Several suitors for the 2007 designation are pretty much inevitable. Continental has already made it quite clear that they plan to file for EWR-Shanghai A.S.A.P., and they wanted it badly to compliment their existing EWR-Beijing service. Delta will no doubt renew its application for an Atlanta-China route, and American will likely seek another route authority to China. United has already said it wants San Francisco-Guangzhou.

My Application Predictions:

American
American is no doubt going to want more, more, more when it comes to the booming China market, just like every other airline. The even money is likely on American seeking a daily Chicago-Beijing authority, as this is the route they initially requested during the first round of new-entrant U.S.-China applications all the way back in 1999. However, I think American might – and they would be wise to – shift their application for the 2007 authority to D/FW instead of Chicago, for several reasons: (a) D/FW offers even more beyond connections that Chicago does, to more cities with more flights, (b) D/FW provides a convenient link to several huge South American markets that could make D/FW a cargo nexus between China and Argentina, Chile and Brazil, (c) Beijing is going to be hosting the Olympics in just over two years, and no doubt AA would love to be in the market by then, and (d) applying for the route from D/FW would have the dual application advantage of not only seeking a new Chinese market for a relatively small U.S.-China player, but also seeking to open an entirely new gateway to China that also happens to be the second largest hub on earth.

My prediction is: American will apply for a daily D/FW-Beijing route with a Boeing 777.

Continental
Continental, too, is definitely going to want their piece of the pie when it comes to China. There is little debate, however, about what scope and scale Continental’s application will have. They have already made it quite clear that their application will be for a daily Newark-Shanghai route with a Boeing 777. Continental will no doubt argue, as they did with Newark-Beijing, that Newark offers onward connections up and down the east coast, along with offering a nonstop link between the largest city in the U.S. and China.

My prediction is: Continental will apply for a daily Newark-Shanghai route with a Boeing 777.

Delta
I doubt that Delta will really want to shake things up with their new application, and as such, I doubt this application will differ much if at all from the previous one. They will likely once again seek a daily Atlanta-Beijing route to be flown daily with a Boeing 777. The route would no doubt be a big boost to Delta, especially given the airline’s almost nonexistent presence in Asia, and it would turn Atlanta into a nexus between Beijing and not only South America, but also the dynamic and rapidly globalizing the economies of the southeastern U.S., namely Georgia, Florida and South Carolina.

My prediction is: Delta will apply for a daily Atlanta-Beijing route with a Boeing 777.

Furthermore, I am not sure if United is applicable for this route case, or if they can expand their Chinese flights out of a different pool of frequencies because they are an incumbent carrier. Nonetheless, if they are to bid for frequencies and authority out of the same pool as the aforementioned carriers in 2006 for service in 2007, I predict:

United
United has already made it clear that it wants to fly nonstop from its large and growing Pacific hub at San Francisco to Guangzhou, right in the heart of China’s industrialized Pearl River Delta. United would do well to serve this market, which no doubt would be easily profitable through the industrial links with the U.S., and the local VFR traffic between one of China’s largest cities and one of the largest Chinese populations in the world outside China, in the Bay Area. It would be highly complimentary to United’s existing Chinese service linking its Chicago and San Francisco hubs with both Beijing and Shanghai.

My prediction is: United will apply for a daily San Francisco-Guangzhou route with a Boeing 747-400.

The Winner?

I really think any one of these carriers truly has a good shot at getting the 2007 Chinese route authority.

American, if its smart, and applies to service Beijing, a new market for the carrier, from Dallas/Fort Worth, a huge hub offering great connections, and a new gateway, has an excellent shot at lobbying and convincing the DoT that the market is best served by a large airline having a critical mass presence in the market by serving China’s two largest and most important cities, and that balancing its service between its two largest hubs would offer the best combination of connections to customers throughout the U.S.
Chance of winning: I would put American’s chance at about 40%.

Continental, on the other hand, may be able to convince the DoT that the market would best be served by allowing another competitor, like American, to gain critical mass in the market, but by serving China’s two largest cities from the same U.S. gateway, which happens to serve the largest air travel market in America. However, I think Continental will definitely face a considerable challenge in winning over the DoT this time around as compared with last year, as Continental’s two main advantages in its initial application – that it would be a new entrant carrier opening up a new market from a new U.S. gateway is now gone. Continental now already serves China, and already does so from Newark.
Chance of winning: I would put Continentals chances at slightly less than American’s, perhaps at 25%.

Delta may learn its lesson from the first trip through the DoT China procedure, and be a bit more realistic about its predictions for traffic flows and market size. However, I generally think that even if Delta is as realistic as possible, the DoT will probably recognize that the Atlanta-China market really is fairly small, and furthermore, that it would offer a fraction of the viable (geographically reasonable) connections that Newark or (potentially) Chicago or Dallas/Fort Worth would. Then again, though, Delta has a distinct advantage for 2007: it would the only serious candidate for the authority which will have absolutely no existing market presence in China. Continental got its slots, American is about to get its slots, but Delta still does not fly to China.
Chance of winning: Delta has a fairly good chance, perhaps 50%, of winning.

United has one advantage on one advantage only in this case, if it is even required and/or interesting in participating (which, as I say, I’m not sure about), and that is the fact that it will be flying nonstop to a new Chinese city. No U.S. carrier currently flies nonstop from the U.S. to Guangzhou and the city currently only gets three flights per week to LAX on China Southern. United no doubt would be tapping into a huge market, but it is definitely going to have to play that up big-time in order to overcome its distinct application disadvantage of already being the immensely dominant player in the nonstop U.S.-China market. In other words, which will sway the DoT more: service to a new Chinese city from an already well-served U.S. gateway to China, or the prospect of service by either a new carrier to China or service to a new Chinese city by an existing carrier in the market?
Chance of winning: United has a fair chances, in my opinion, of around 25%.

Just my opinions. It’s long, and for that I’m sorry. Please feel free to comment, as I am genuinely interested in what others foresee occurring in what is sure to be a hotly contested and interesting route case.
 
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LAXintl
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 3:06 am

If you read the previous China route awards, the DOT clearly stated that it wanted to introduce additional carriers into the China market outside the United & Northwest duopoly along with increase in city pair offerings between the US and China. It made provided both justifications particularly during its award of the EWR-PEK service to CO, since New York was the largest market single market without direct US airline service to China.

From my own personal opinion and having dealt with the DOT, it seems the department spent the first two years of awards expanding the US carrier base to China primarily, and this time around might very well use the award to fragment the market by introducing nonstop US airline service to a new Chinese city instead of everyone continued concentration of service to Beijing and Shanghai. Hence it seems to me, United this third time around has a much better shot for the route award even tough it one of the number one incumbent carrier in the US-China market. There is no doubt Guangzhou and the surrounding region is on its way to becoming one of the most important economic areas in Asia, and as such US business and consumers would benefit with having nonstop air links.
As a second choice I would view the DOT possibly continuing the path of introducing a yet additional airlines in the market and possibly select Delta then for the previously proposed ATL-PEK service. One negative about the Delta service was that it provided the weakest traffic potential as the natural feed provided by the Southeast US provided was the weakest demand of the main competing bids.

And we should not forget again the possibility of other smaller carriers such as Hawaiian Air or others to reapply for China routes either.
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STT757
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 3:18 am

Since there are no US or Chinese carriers serving the NYC-Shanghai market I give CO hands down favorite to be awarded the route, UAL already serves ORD-PEK.

Also CO is taking delivery of two additional 777-200ERs in 2007 to coincide with EWR-Shanghai being launched, that along with their comitment over the years to EWR-Hong Kong, EWR-Tokyo, EWR-Beijing, EWR-Dehli, and EWR-Tel Aviv show a strong comitment to devloping US-Asia routes.
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MalpensaSFO
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 3:42 am

Quoting Commavia (Thread starter):
My prediction is: Continental will apply for a daily Newark-Shanghai route with a Boeing 777

The route is already being planned, or was it not?

Quoting Commavia (Thread starter):
Chance of winning: United has a fair chances, in my opinion, of around 25%.

Bump UAL up a few notches to 75%....
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worldtraveler
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 3:52 am

Nice to see a good, logical discussion. I would agree that AA is probably the underdog unless they propose something out of DFW.

UA could have an advantage with CAN service but NW already flies there. There is much less of a case that UA is breaking new ground.

CO does have a strong case from NYC but there's nothing to say that this time around DL will make its route application for PVG from there. IF DL applies for JFKPVG instead of ATLPEK, it would seem they would almost be guaranteed to get it. New carrier and new route from a huge city.
 
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aloha73g
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 3:54 am

Hawaiian will definately be re-applying for HNL-China.

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PlaneGuy27
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 5:29 am

There is some confusion on this issue:

The rights for frequencies for 2007 must come from a passenger carrier that is already designated in the US-China Market. Currently, American, Continental, United and Northwest are the only carriers that have these designations so Delta is not able to even apply for 2007 frequencies. They could however apply for the 2008 designation and frequencies. Essentially that means these seven frequencies will go to one of those 4 carriers.

Continental and United have already been public in their proposed applications. CO will apply EWR-PVG and UA will apply for SFO-CAN.

The question remains where Northwest and American will apply? I think if AA was smart they would apply for LAX-PVG or something out of JFK. A JFK application would go over the CO application from EWR and could create some real competition.

I can't imagine that NW or UA have any chance of winning these rights. UA has 28 weekly frequencies into China, NW has 17 (14 passenger + 3 cargo) - making it difficult for DOT to go against two other carriers with 7 wkly freqs each - AA and CO.

SHould be interesting...
 
MAH4546
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 5:33 am

Rumour is that American will be applying for a route of Los Angeles, not Dallas. Arguably the single largest China-USA O&D market, AA would offer the only US airline service between the US and China.
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commavia
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 5:35 am

Quoting PlaneGuy27 (Reply 6):
The rights for frequencies for 2007 must come from a passenger carrier that is already designated in the US-China Market. Currently, American, Continental, United and Northwest are the only carriers that have these designations so Delta is not able to even apply for 2007 frequencies. They could however apply for the 2008 designation and frequencies. Essentially that means these seven frequencies will go to one of those 4 carriers.

Thank you very much for clearing that up. I guess my points about DL were moot, then. Oh well.

Quoting PlaneGuy27 (Reply 6):
The question remains where Northwest and American will apply?

Does Northwest really have any standing here? Unless they want to apply for rights to fly nonstop to PEK or PVG, presumably from DTW, would the DoT ever award rights to Northwest which otherwise would likely want service via NRT, over an airline like AA, CO or UA who would all presumably be proposing service nonstop from a U.S. gateway?

Quoting PlaneGuy27 (Reply 6):
I think if AA was smart they would apply for LAX-PVG or something out of JFK.

But LAX and JFK already have service to China, pretty extensive service in LAX's case. If AA went for a DFW-PEK route, it would not only mean opening up a new Chinese city for AA, but also mean opening up an enormous hub -- the world's second largest -- to China nonstop. Would that not be more attractive to the DoT?

Quoting PlaneGuy27 (Reply 6):
A JFK application would go over the CO application from EWR and could create some real competition.

But wouldn't that be too much for the New York market? The DoT might then turn to the only non-New York application, UA's SFO-CAN application. On the other hand, if AA applies for DFW-PEK, there is absolutely no existing service that could blot out the market impact of this new route.

Quoting PlaneGuy27 (Reply 6):
I can't imagine that NW or UA have any chance of winning these rights. UA has 28 weekly frequencies into China, NW has 17 (14 passenger + 3 cargo) - making it difficult for DOT to go against two other carriers with 7 wkly freqs each - AA and CO.

Agreed. If, indeed, this proceeding is only open to AA, CO, NW and UA, as you say, than I cannot foresee how the DoT could possibly give even more frequency to the two already enormously dominant incumbent carriers, if there priority really is more competition and market access.
 
Tracks
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 5:47 am

This may be an aside but are US carriers allowed access to second tier airports like Xian, Chongqing, Nanjing, Chengdu etc? I'm not suggesting that they would neessarily want to fly there but i'm trying to ascertain whether they'd be allowed to under the present bilateral agreement. I remember reading a few years ago about the Chinese government considering allowing European (and maybe US) carriers to use 2nd tier airports provided they flew via Hainan island to increase tourism there.
 
MAH4546
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 5:48 am

Quoting PlaneGuy27 (Reply 6):
NW has 17 (14 passenger + 3 cargo) -

Northwest has 21 passenger + 3 cargo. They fly daily from Tokyo to Shanghai, Beijing, and Guangzhou.
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PlaneGuy27
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 6:05 am

Quoting MAH4546 (Reply 10):
Northwest has 21 passenger + 3 cargo. They fly daily from Tokyo to Shanghai, Beijing, and Guangzhou.

Correct, I was still thinking pre-last agreement. NW does indeed have 24 weekly frequencies into China.

Quoting Commavia (Reply 8):
But LAX and JFK already have service to China, pretty extensive service in LAX's case. If AA went for a DFW-PEK route, it would not only mean opening up a new Chinese city for AA, but also mean opening up an enormous hub -- the world's second largest -- to China nonstop. Would that not be more attractive to the DoT?

New York area already had service to China before the application but there was no US Flag carrier service there which benefitted CO in the last round. It could work in favor of someone (like AA) applying from LAX.

Quoting Commavia (Reply 8):
But wouldn't that be too much for the New York market? The DoT might then turn to the only non-New York application, UA's SFO-CAN application. On the other hand, if AA applies for DFW-PEK, there is absolutely no existing service that could blot out the market impact of this new route.

I guess the question goes to what is more important, current frequency distribution between incumbents and new entrants or location of hubs and destinations in China applied for. I have to think that the importance would go:

1. frequency distribution (giving AA and CO an edge)
2. US point applied for (depends on how it comes out re: DFW, LAX, or JFK/EWR)
3. Point in China (NW applying for a fourth Chinese destination like Xian, etc.)

Quoting Tracks (Reply 9):
This may be an aside but are US carriers allowed access to second tier airports like Xian, Chongqing, Nanjing, Chengdu etc? I'm not suggesting that they would neessarily want to fly there but i'm trying to ascertain whether they'd be allowed to under the present bilateral agreement.

I believe the current agreement adds secondary destinations (outside PVG, PE and CAN) and frequencies in 2007. For cargo or passenger. The problem is that there is a fifth freedom cap on weekly services over Japan in the agreement.

But there could always be surprises.....
 
SeeTheWorld
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 6:26 am

This is a great discussion and everyone is bringing up a lot of good points.

Quoting Commavia (Reply 8):
Does Northwest really have any standing here? Unless they want to apply for rights to fly nonstop to PEK or PVG, presumably from DTW, would the DoT ever award rights to Northwest which otherwise would likely want service via NRT, over an airline like AA, CO or UA who would all presumably be proposing service nonstop from a U.S. gateway?

NW currently has the right to fly nonstop between the U.S. and China but they choose not to because they don't have the right aircraft to do it profitably. The 744 is too big and the A330 can't make it with a full load. Therefore, until they solve this problem, they are unlikely to apply for any routes from the Continental U.S. and are thus in a tough spot.

Quoting Tracks (Reply 9):
This may be an aside but are US carriers allowed access to second tier airports like Xian, Chongqing, Nanjing, Chengdu etc?

My understanding is there is currently or will be in 2007 access into second-tier Chinese cities (i.e. not Beijing, Shanghai, or Guangzhou).

I think the 2007 designations are wide open. It'll be an extremely competitive application if what I think happens, happens:

CO: EWR-PVG
AA: LAX or DFW-PEK
UA: SFO-CAN
 
commavia
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 6:35 am

Quoting SeeTheWorld (Reply 12):
This is a great discussion and everyone is bringing up a lot of good points.

Agreed. Thanks to all for this interesting, engaged, and stimulating conversation!  Smile

Quoting SeeTheWorld (Reply 12):
NW currently has the right to fly nonstop between the U.S. and China but they choose not to because they don't have the right aircraft to do it profitably.



Quoting SeeTheWorld (Reply 12):
Therefore, until they solve this problem, they are unlikely to apply for any routes from the Continental U.S. and are thus in a tough spot.

Right, I understand. That's what I meant. NW is in a "tough spot," as you say, because they already have this underlying authority, but choose to use it for NRT-China instead of nonstops from the U.S. to China. We are in complete agreement.
 
worldtraveler
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 8:07 am

PlaneGuy,
DL has said that it is asking the DOT to negotiate w/ China to move the new carrier designation to 2007 along w/the expanded frequencies by incumbents. DL's primary incentive is to be in there before the BJS Olympics, which I think they will be.
 
MAH4546
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 8:09 am

Quoting WorldTraveler (Reply 14):
DL has said that it is asking the DOT to negotiate w/ China to move the new carrier designation to 2007 along w/the expanded frequencies by incumbents.

They will have to work very hard to do so. I doubt the DOT will agree.
a.
 
worldtraveler
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 8:27 am

It's not the DOT that has an issue... it's the Chinese.

I'm not sure that it makes a big difference for DL whether it's 2007 or 8.
 
BigGSFO
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 9:29 am

Quoting MAH4546 (Reply 7):
Arguably the single largest China-USA O&D market, AA would offer the only US airline service between the US and China.

Mark, do you mean AA wold offer the only US airline service between LAX and China?

I agree with the consensus: AA, CO and UA will be lobbying hard for additional China authorities. It should be interesting as there would probably be enough traffic to give AA, CO and UA the authorities they are seeking and then some.

Can you imagine if China and the US ever had an Open Skies agreement? It would be chaos!  Smile
 
MalpensaSFO
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 9:35 am

Quoting MAH4546 (Reply 7):
Arguably the single largest China-USA O&D market, AA would offer the only US airline service between the US and China

The route is flown as a full code-share with China Eastern..

United Airlines flys: ORD-PEK, SFO-PEK, ORD-PVG, SFO-PVG
Continental flys: EWR-PEK
American Airlines flys: ORD-PEK, will fly ORD-PVG(or is that reverse?)
Norhtwest Airlines -flew-: DTW-PEK

So in other words there are American airlines flying nonstop to China...
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Trvlr
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RE: Prognostications: U.S.-China Route Application

Fri Mar 10, 2006 9:56 am

Given DL's recently announced expansion at JFK, I wonder if the airline will propose JFK-PVG instead of ATL-PEK or ATL-PVG? That way, DL would satisfy not only the DOT's desire for a new U.S. carrier in the market, but also the demand for New York-Shanghai service.

Quoting MalpensaSFO (Reply 18):
So in other words there are American airlines flying nonstop to China...

I think he meant from Los Angeles.

Aaron G.
 
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STT757
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 10:52 am

Quoting Trvlr (Reply 19):
Given DL's recently announced expansion at JFK, I wonder if the airline will propose JFK-PVG instead of ATL-PEK or ATL-PVG?

The 2007 route awards are only open to carriers currently serving China, that excludes DL from applying.
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MAH4546
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 11:08 am

Quoting BigGSFO (Reply 17):
Quoting MAH4546 (Reply 7):
Arguably the single largest China-USA O&D market, AA would offer the only US airline service between the US and China.

Mark, do you mean AA wold offer the only US airline service between LAX and China?

Yes, thank you, that is what I meant. That was a major selling point for CO, and I think that AA will play it if the rumours that they will go for an LAX-China route are true.
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PlaneGuy27
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 11:41 am

Quoting WorldTraveler (Reply 14):
PlaneGuy,
DL has said that it is asking the DOT to negotiate w/ China to move the new carrier designation to 2007 along w/the expanded frequencies by incumbents. DL's primary incentive is to be in there before the BJS Olympics, which I think they will be.

There is absolutely no incentive for the Chinese Government to move the 2008 designation up to 2007. The Chinese carriers haven't added any new services since the last agreement - and surprise surprise - only US carriers have cashed in on the new rights.

I would say that it is very very very unlikely that Delta would get anything approved for a "move-up" to 2007. Looks like they will have to wait until 2008.

Delta had a problem working against them in the last round which helped American and Continental. Both carriers could point fingers at Delta and show that they weren't dedicated to the Asian Market. For instance, DL used to serve HKG, BKK, SEL, TPE, etc. and they are now down to ONE DAILY FLIGHT. CO & AA have both shown that although not as big as UA and NW, they are indeed committed to the Asia Pacific market.

The secondary 2007 frequencies are actually going to be shared with either all cargo operators or passenger carriers so UPS, FedEx and Polar could grab them (three all-cargo carriers designated in the US/China markets.
 
aaway
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 12:14 pm

Quoting MAH4546 (Reply 7):
Rumour is that American will be applying for a route of Los Angeles, not Dallas. Arguably the single largest China-USA O&D market, AA would offer the only US airline service between the US and China.



Quoting Commavia (Reply 8):
But LAX and JFK already have service to China, pretty extensive service in LAX's case. If AA went for a DFW-PEK route, it would not only mean opening up a new Chinese city for AA, but also mean opening up an enormous hub -- the world's second largest -- to China nonstop. Would that not be more attractive to the DoT?

I'll agree with Mark on this one. LAX has non-stop Chinese mainland service provided by three non-US carriers: CA (PEK 5x p/wk), CZ (CAN 5x p/wk), MU (SHA 7x p/wk). Indeed, a good strategy on the part of AA to emulate CO's strategy in highlighting that this major US gateway (LAX) lacks a US carrier presence offering nonstop service to China. In addition, LAX would gain parity with SFO (a important, yet smaller O/D market) with dual Chinese/US-based carrier service, and, if DoT continues the doctrine that Laxint alluded to, AA provides the competitive component vis-a-vis UA from a West Coast gateway.

Commavia, you have valid points regarding DFW and its connectivity. But, (and without divulging too much), I don't believe DFW would be the best choice for AA's next application. I'd think DFW would fair better once AA has better established itself in the Chinese market.
"The greatest mistake you can make in life is to continually be afraid you will make one." - Elbert Hubbard
 
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STT757
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 12:28 pm

NYC has no nonstop service to Shanghai, CO having the only nonstop from the NYC area to Shanghai has to be a major advantage.

Chicago and Los Angeles are already well served to China, the NYC area needs more flights to China.
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Carpethead
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 12:32 pm

It would seem vastly inadquate for only one new route a year between the US-China due to the increasing trade between the two countries.
The chances of China allowing open season is pretty remote but until these restrictions are removed or relaxed, carriers in S.Korea and Japan stand to benefit greatly.
For example, Chinese connection is one of reason JL increased its NRT-ORD to double daily. Plus KE/OZ have good connections with even regional cities in China.
 
MAH4546
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 12:38 pm

Quoting STT757 (Reply 24):
NYC has no nonstop service to Shanghai, CO having the only nonstop from the NYC area to Shanghai has to be a major advantage.

Chicago and Los Angeles are already well served to China, the NYC area needs more flights to China.

Los Angeles is not well served to China considering how huge the market is. Shanghai is the only Chinese city with daily flights to Los Angeles.
a.
 
MalpensaSFO
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RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 12:41 pm

Quoting Aaway (Reply 23):
In addition, LAX would gain parity with SFO (a important, yet smaller O/D market) with dual Chinese/US-based carrier service, and, if DoT continues the doctrine that Laxint alluded to, AA provides the competitive component vis-a-vis UA from a West Coast gateway.

San Francisco is not to be dismissed... Service to Asia/Pacific includes:

Air China : SFO-PEK-PVG
Air New Zealand: SFO-AKL
ANA: SFO-NRT
Asiana: SFO-ICN
Cathay: SFO-HKG
China Airlines: SFO-TPE
EVA Airways: SFO-TPE(2)
JAL: SFO-NRT
Korean Air: SFO-ICN
Northwest: SFO-NRT
Philippines: SFO-GUM-MNL(2)
QANTAS: SFO-SYD
United: SFO-PEK; SFO-PVG; SFO-HKG; SFO-ICN; SFO-NRT(2); SFO-KIX; SFO-NGO; SFO-SYD
Singapore: SFO-HKG; SFO-ICN

Quoting STT757 (Reply 24):
Chicago and Los Angeles are already well served to China, the NYC area needs more flights to China.

Arent Air China and Continental Airlines both in the market?
TO FLY IS TO SERVE
 
goCOgo
Posts: 709
Joined: Mon Jan 17, 2005 11:24 am

RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 12:48 pm

Quoting Commavia (Thread starter):
American’s chance at about 40%.



Quoting Commavia (Thread starter):
put Continentals chances at slightly less than American’s, perhaps at 25%.



Quoting Commavia (Thread starter):
Delta has a fairly good chance, perhaps 50%, of winning.



Quoting Commavia (Thread starter):
United has a fair chances, in my opinion, of around 25%.

40+25+50+25 = 140%. p(all) = 100%  Confused

Anyway, NYC-China still is under served for the size market, even with the CO PEK flight. Saying that CO doesn't need the route because they already serve one city is crazy. China is huge. Why not tell BA, LH, or AF that they need not serve LAX, ATL, et.al. because they already serve the US via JFK. CO certainly seems confident. They already ordered 2 more 772ERs for delivery just in time for PVG (not that they can;t use them elsewhere).

As for AA from DFW, unlikely. DFW is out of the way for most Americans as China routes due north/northwest from the US. DFW is South of most places. And DOT shouldn't care about South American connections. The authorities are to help Americans to get to China and Chinese to get to the US, not for South Americans. ORD-PEK, maybe, but UA is already on the route I think. LAX-PVG/PEK, possibly.

DL, well, they can't in 2007.

UA I see as effectively out because they already have several China authorities (CO only has one, so that is why I don't hold that against them as much). Plus, the Eastern US is far more under served to China than the West Coast.

My (biased and probably inaccurate) opinion:
AA: 35%
CO:61%
UA: 4%
"Why you fly is your business, how you fly is ours"
 
commavia
Topic Author
Posts: 11489
Joined: Mon Apr 25, 2005 2:30 am

RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 1:08 pm

Quoting GoCOgo (Reply 28):
40+25+50+25 = 140%. p(all) = 100%

I wasn't meaning for it to equal 100%. Perhaps it would have been more clear if I said, for example, 2-to-1 against, 3-to-1 against, etc.

Quoting GoCOgo (Reply 28):
Saying that CO doesn't need the route because they already serve one city is crazy.

It's not "crazy." It is "logical" if the objective is to provide as much variety in competitive market access as possible. I was simply stating -- and I think we could all agree on this -- that CO's two main arguments for getting the 2005 authority -- that EWR was an unserved market to China by a U.S. carrier, and that CO was a new U.S. carrier in the market are both now moot. I was simply reflecting that CO's two largest arguments for 2005 may not help it now, and thus its chance of getting the slots -- vs. competitors -- is somewhat diminished.

My personal opinion is that the U.S.-China market is growing so fast that CO could easily fill EWR-PVG, AA DFW-PEK, etc. and everyone would have enough demand to go around. But, alas, only one airline can win for 2007.

Quoting GoCOgo (Reply 28):
DFW is out of the way for most Americans as China routes due north/northwest from the US.

And EWR is way out of the way for most Americans outside of the eastern U.S.

Quoting GoCOgo (Reply 28):
DFW is South of most places.

EWR is north and east of most places.

Quoting GoCOgo (Reply 28):
And DOT shouldn't care about South American connections. The authorities are to help Americans to get to China and Chinese to get to the US, not for South Americans.

Of course the DoT should. It should care about which carrier can most invigerate the market, and which carrier should provide the most convenience and necessity to passenger and cargo customers on the route. After all, these are combination frequencies, not passenger-only. In that regard, it is virtually undisputable that AA would offer an incredible nexus over DFW by providing major South American markets with direct, convenient access to China over what was recently rated as the "#1 Cargo Airport in the World."
 
mattnrsa
Posts: 426
Joined: Tue Dec 10, 2002 12:27 pm

RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 1:29 pm

When will the decision be made?
 
BigGSFO
Posts: 2278
Joined: Sun Jun 12, 2005 5:27 am

RE: Prognostications: U.S.-China Route Application

Fri Mar 10, 2006 2:02 pm

Quoting Mattnrsa (Reply 30):
When will the decision be made?

I do not think the contenders have filed official applications yet. Does anoyone know when these are reviewed?

[Edited 2006-03-10 06:18:27]
 
aaway
Posts: 1468
Joined: Tue Oct 21, 2003 2:07 am

RE: Prognostications: U.S.-China Route Applications

Fri Mar 10, 2006 2:14 pm

Quoting MalpensaSFO (Reply 27):
Quoting Aaway (Reply 23):
In addition, LAX would gain parity with SFO (a important, yet smaller O/D market) with dual Chinese/US-based carrier service, and, if DoT continues the doctrine that Laxint alluded to, AA provides the competitive component vis-a-vis UA from a West Coast gateway.

San Francisco is not to be dismissed... Service to Asia/Pacific includes:

Perhaps I wasn't clear. I was inferring that LAX would possibly obtain gateway status to China with a US-based carrier a-la SFO.
"The greatest mistake you can make in life is to continually be afraid you will make one." - Elbert Hubbard
 
PlaneGuy27
Posts: 289
Joined: Sat Jan 24, 2004 12:38 am

RE: Prognostications: U.S.-China Route Applications

Sat Mar 11, 2006 12:45 am

Quoting MAH4546 (Reply 10):
Quoting PlaneGuy27 (Reply 6):
NW has 17 (14 passenger + 3 cargo) -

Northwest has 21 passenger + 3 cargo. They fly daily from Tokyo to Shanghai, Beijing, and Guangzhou.

Correction to myself, NW actually has 32 weekly total freqs to China. 21 psgr and 11 all-cargo freqs. I left out the new freqs they received for 2005 & 2006.
 
SeeTheWorld
Posts: 1090
Joined: Sat Dec 31, 2005 2:46 am

RE: Prognostications: U.S.-China Route Applications

Sat Mar 11, 2006 2:00 am

Quoting PlaneGuy27 (Reply 22):
Delta had a problem working against them in the last round which helped American and Continental. Both carriers could point fingers at Delta and show that they weren't dedicated to the Asian Market. For instance, DL used to serve HKG, BKK, SEL, TPE, etc. and they are now down to ONE DAILY FLIGHT. CO & AA have both shown that although not as big as UA and NW, they are indeed committed to the Asia Pacific market.

While this is one of many factors that went against DL, one of the primary reasons DL didn't get a China route was because an apples-to-apples comparison of projected passengers and revenue on the the proposed three applications (CO, AA, and DL) showed the DL service to be the least successful.

Quoting Commavia (Reply 29):
Of course the DoT should. It should care about which carrier can most invigerate the market, and which carrier should provide the most convenience and necessity to passenger and cargo customers on the route.

While the success of the route for the carrier from international connections and/or cargo is a factor, the primary focus of the DOT is consumer benefit, i.e. U.S. consumers. In addition, with the new expensive and cumbersome U.S. transit visa policies inacted post-9/11, international-to-international connections through the U.S. are a minor factor.

The fact is, the 2007 case is not a slam dunk for anyone - all three carriers have a decent shot at securing the route, i.e. > 25%.
 
commavia
Topic Author
Posts: 11489
Joined: Mon Apr 25, 2005 2:30 am

RE: Prognostications: U.S.-China Route Applications

Sat Mar 11, 2006 2:03 am

Quoting SeeTheWorld (Reply 34):
In addition, with the new expensive and cumbersome U.S. transit visa policies inacted post-9/11, international-to-international connections through the U.S. are a minor factor.

The new U.S. visa requirements have had little to no impact on cargo shipping, which continues to boom, and D/FW is perfectly positioned to take some of this huge and growing market between South America and China.

Quoting SeeTheWorld (Reply 34):
The fact is, the 2007 case is not a slam dunk for anyone - all three carriers have a decent shot at securing the route, i.e. > 25%.

Like I said:

I really think any one of these carriers truly has a good shot at getting the 2007 Chinese route authority.
 
SeeTheWorld
Posts: 1090
Joined: Sat Dec 31, 2005 2:46 am

RE: Prognostications: U.S.-China Route Applications

Sat Mar 11, 2006 3:20 am

Quoting Commavia (Reply 35):
The new U.S. visa requirements have had little to no impact on cargo shipping, which continues to boom, and D/FW is perfectly positioned to take some of this huge and growing market between South America and China.

I wasn't refering to cargo. DOT focuses on U.S. consumer benefit, as I stated. Having said that, if you look at the great circle mileage between China and South America, DFW is comparatively no better geographically positioned than ORD, IAD, EWR, or LAX.

PEK-EWR-EZE: 12,121 miles
PEK-IAD-EZE: 12,138 miles
PEK-ORD-EZE: 12,182 miles
PEK-DFW-EZE: 12, 256 miles
PEK-LAX-EZE: 12,365 miles

The fact is, the U.S. is pretty much in between China and South America regardless of whether you transit via the West Coast, the East Coast, or the middle of the country.

[Edited 2006-03-10 19:21:13]

[Edited 2006-03-10 19:31:33]
 
rwsea
Posts: 2515
Joined: Sun Jan 30, 2005 2:23 pm

RE: Prognostications: U.S.-China Route Applications

Sat Mar 11, 2006 3:46 am

I think the following should occur:

2007: UA gets SFO-CAN. SFO offers the most connections to the rest of the US, and is practical for the whole country to use. For instance, places like SEA, LAX, and LAS can all feed into the service, where as CO from EWR or AA from DFW is pretty much worthless for these folks. Plus, this opens a new non-stop destination from the USA to China, on an American carrier. Other applicants just duplicate cities that already have plenty of service from the USA.

2008: DL gets ATL-PEK. This opens up China to a new part of the country, a new city, and a new carrier. This supports what the DOT said they planned to do when these new rights became available.
 
goCOgo
Posts: 709
Joined: Mon Jan 17, 2005 11:24 am

RE: Prognostications: U.S.-China Route Applications

Sat Mar 11, 2006 4:14 am

Quoting Commavia (Reply 29):
and I think we could all agree on this -- that CO's two main arguments for getting the 2005 authority -- that EWR was an unserved market to China by a U.S. carrier, and that CO was a new U.S. carrier in the market are both now moot. I was simply reflecting that CO's two largest arguments for 2005 may not help it now, and thus its chance of getting the slots -- vs. competitors -- is somewhat diminished.

While I agree that those were CO's main points, I don't agree that they are moot. Well, the argument that CO is a new carrier of the 2007 authority is moot for everyone because only incumbents can apply. It still might help them (as well as AA) that they have only one authority while UA and NW have multiple to China to several cities.

As for their other argument, the eastern US is still under served on US-China. One city once (twice if you count the Chinese carrier) a day doesn't a market that big. If that was the case, CO wouldn't have their European network as it is today because the already serve London, so they "serve" Europe. I think we can agree that is a ridiculous supposition.

Quoting Commavia (Reply 29):
Quoting GoCOgo (Reply 28):
DFW is out of the way for most Americans as China routes due north/northwest from the US.

And EWR is way out of the way for most Americans outside of the eastern U.S.

Quoting GoCOgo (Reply 28):
DFW is South of most places.

EWR is north and east of most places.

While I'll agree it is somewhat out of the way for those that have to fly quite a bit east to get to EWR, it is still better positioned to serve a larger market: the Eastern US. North is on the way to China, south isn't. For US passengers, DFW is only convenient to those who live in and around Texas. Anyway, this is probably moot, as their 2005 and 2006 applications were for ORD service, so I don't see why they would change for 2007.

Quoting Commavia (Reply 29):
Of course the DoT should. It should care about which carrier can most invigerate the market,

No, the US DOT should care about US businesses and consumers. And as the last excellent post by SeeTheWorld showed, DFW isn't in any better position to serve South America, anyway.

Quoting RwSEA (Reply 37):
SFO offers the most connections to the rest of the US, and is practical for the whole country to use. For instance, places like SEA, LAX, and LAS can all feed into the service, where as CO from EWR or AA from DFW is pretty much worthless for these folks.

Practical, yes, convenient, no. That is not convenient from the eastern US. From EWR, places like BOS, ATL, and DTW can feed the serves as well as those western US cities can feed SFO service

Quoting RwSEA (Reply 37):
Other applicants just duplicate cities that already have plenty of service from the USA.

The eastern US hardly has "plenty" of service to anywhere in China.
"Why you fly is your business, how you fly is ours"
 
SeeTheWorld
Posts: 1090
Joined: Sat Dec 31, 2005 2:46 am

RE: Prognostications: U.S.-China Route Applications

Sat Mar 11, 2006 4:17 am

Quoting RwSEA (Reply 37):
2008: DL gets ATL-PEK. This opens up China to a new part of the country, a new city, and a new carrier. This supports what the DOT said they planned to do when these new rights became available.

I have to believe that DL will likely get the 2008 designation. The DOT always wants to add a new carrier in a restrictive market given the opportunity, provided it's reasonable.
 
commavia
Topic Author
Posts: 11489
Joined: Mon Apr 25, 2005 2:30 am

RE: Prognostications: U.S.-China Route Applications

Sat Mar 11, 2006 7:46 am

Quoting GoCOgo (Reply 38):
As for their other argument, the eastern US is still under served on US-China.

That was not my other argument. My other argument was that CO's other main contention for the 2005 authority was that EWR was a new U.S. gateway to China, currently unserved by any U.S. carrier to China. That point is now moot.

Quoting GoCOgo (Reply 38):
the Eastern US. North is on the way to China

For the "Eastern U.S. North!" For the rest of the country, EWR is hardly "on the way to China." Example: MIA-DFW-PEK is a whopping 175 miles further than MIA-EWR-PEK which, roughly translated, means about any extra 30 minutes of flying (but probably more as weather/ATC delays are far less common at DFW than EWR). Another example: ATL (sorry DL!) to PEK via DFW is only 126 miles further than via EWR, or roughly an extra 20 minutes of flying.

DFW is a larger hub, offering more flights to more cities, and provides more geographically logical connections to far more parts of the U.S. than EWR does. That is all I am trying to say.

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