When is a decision to be reached on the award of this route? I ask this as I am curious as to what rate the Chineese are parceling out access to Beijing. Are they trying to balance out route awards among the Europeans, Americans, and others as well as their own airlines?
I don't know the specifics with regard to Chinese air service bilateral agreements with the rest of the world, but the U.S.-China bilateral allows for additional access for carriers of both countries in each year through 2010. And while the Chinese carriers are nowhere near using all of their currently allotted frequencies, the U.S. carriers continue to bump up against the limit as the demand for seats by passengers and frequencies by U.S. carriers far outstrips the available supply of either.
At this time, four U.S. carriers are allowed to operate nine daily passenger frequencies between the U.S. and the three main cities in China -- Beijing, Shanghai and Guangzhou -- either nonstop from the U.S. mainland or via an intermediate point (passenger frequencies to smaller Chinese cities and all-cargo frequencies are allocated from separate pools of frequencies where the supply is currently somewhat greater than the demand). United currently operates four daily flights, Northwest three (all via Tokyo), and American and Continental one each.
The additional passenger frequencies (seven weekly or one daily) that are at issue in the current route proceeding at the U.S. DOT are available for service effective March 25, 2007, and seven more weekly frequencies are available on the same date in 2008, 2009 and 2010. Plus, in 2008 and 2010 only, one additional U.S. carrier can be designated in each of those years to begin serving the three main cities in China, the only ones that U.S. carriers have shown any interest in serving to date.
As to when the 2007 frequencies will be awarded by the DOT, my guess (and that's all it is, a guess) is that a decision will be announced within the next week so the DOT can attempt to claim, without inducing too much laughter, that it is giving the winning carrier sufficient time to start the new route immediately once the frequencies become available in March. So while most airlines believe that major international routes require at least four to six months lead time for a route to be launched properly, the popularity and presumed profitability of U.S.-China routes will nonetheless cause the winner to undoubtedly salute smartly and tell the DOT that it will indeed start the new service on March 25, 2007, regardless of the negative impact such a quick start-up would likely have on the route's load factors and, more importantly, profitability during the initial months of service.
And as for the question of why this decision is so late in coming from the DOT, the agency was IMHO distracted by American's outrageous (again, IMHO) attempt in early December to re-write its service proposal well after all of the pleadings were filed in the current route case and it was ripe for a decision. This action by American was apparently precipitated by the failure of negotiations with its pilots to allow the operation of a 16+ hour nonstop DFW-PEK flight, thus causing the carrier to change its request to a DFW-
ORD-PEK flight. But American's action also clearly violated the DOT's administrative rules for the route case, and the other participants (Continental, Northwest and United) objected vehemently to the possibility of American being allowed to change its route proposal at such a late stage in the proceeding. In my opinion, this probably caused the DOT to do a substantial re-write of its order awarding the new frequencies, delaying its issuance by a month or more and, in the process, almost certainly eliminating American as a potential winner (and having read that carrier's pleadings in this case, it wasn't a very strong proposal anyway, IMHO).
So will United get the China route award? I believe that it will, because 1.) as discussed above, American has shot themselves in the foot with a rather large-gauge gun (figuratively speaking, of course, as I'm not a violent person
), 2.) Northwest isn't fully using the frequencies that it already has, in the sense that the DOT really doesn't care about how well Northwest serves Japan-China passengers (and it flies a significant number of them) in the limited-frequency U.S.-China market, and 3.) Continental proposed service in the broader New York-China market that already has nonstop flights offered by three carriers, including Continental itself. Having said that, I suppose we'll soon find out whether the DOT agrees with me.
