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Hong Kong signs U.S. air-service deal
By Alex Frew McMillan
HONG KONG, China (CNN) -- Hong Kong and the United States have signed an air-services pact that eases travel restrictions for carriers in both places. The Hong Kong government signed the deal with the United States on Saturday after four days of talks, completing three years of negotiations. Under the deal, U.S. airlines can use Hong Kong as a base in Asia, dropping off or picking up passengers and cargo before flying on to third destinations in Asia. Hong Kong's airlines get reciprocal rights -- known as "fifth-freedom" rights -- in the United States, meaning they can fly to many new destinations there. American-Cathay code share dealAmerican Airlines, the largest U.S. carrier, has also established a code-sharing deal with Hong Kong's main carrier, Cathay Pacific. The two carriers will share codes on flights to 20 U.S. cities, selling seats on each other's flights. Five more code-share destinations will be added in the second year of the deal. Cathay said it welcomed the code-sharing deal with American and the "greater commercial opportunities" it entails. "However, Cathay Pacific is disappointed with the outcome of the fifth freedom discussion, which is a clear unbalanced exchange in favor of the U.S. carriers," the airline said in a statement. On-going passenger flights to doubleWhile U.S. carriers will be able to fly to third countries in Asia, U.S. negotiators won restrictions on third countries that Hong Kong's carriers can serve. They will not have access to many cities in Europe, for instance. The number of "fifth-freedom" cargo flights is due to increase to 64 flights per week in each direction, up from eight per week now. The number of "fifth-freedom" passenger flights will rise to 56 per week from 28 now, with a great range of final destinations. The code-sharing deal greatly expands Cathay's service to the United States. It currently flies to seven U.S. cities but will now be able to market American's services as its own. American, on the other hand, did not fly to Hong Kong at all and will now be able to put its code on Cathay's flights in Asia. Air stocks lower in HKCathay's stock rose 3.51 percent on Friday on word of the deal and stronger traffic figures. But it is down 2.12 percent at HK$11.55 in afternoon trade in Hong Kong. Analysts said the deal is not bad for Cathay but likely will benefit the U.S. airlines more. Shares in mainland China's carriers are also suffering, China Southern falling 3.61 percent to HK$2.00 and China Eastern off 1.9 percent at HK$1.03 on fears they will see greater competition.
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