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Last Updated: Sunday, 25 July, 2004, 11:09 GMT 12:09 UK
Massive boost to US-China flights
Plans for a new international airport being built in Guangzhou
China is in the midst of an airport building boom
China and the US have signed a deal which should increase the number of flights between the two by 460%.

The agreement foresees a gradual rise over the next six years from the current 54 flights a week to 249.

It also looks to more than double the number of airlines permitted to run services between the US and China from four to nine.

The news comes as Chinese state media reported domestic air traffic soared by 37% in the first quarter of 2004.

The rapid rise in passenger numbers to more than 46 million - almost one in 25 of China's population - follows the country's breakneck growth, which topped 9% on an annual basis in the three months to March.

New routes

Northwest Airlines:
Detroit-Guangzhou, via Tokyo (seven flights a week)
United Airlines:
Chicago-Shanghai non-stop (seven flights a week)
US Transportation Secretary Norman Mineta said the deal was a start, not the end of a process, and that further opening was possible.

"Exponential growth in our trading has not been reflected in terms of what's going on in transportation," he said.

Under the new deal, US airlines will be allowed to build hubs in China from 2007, and there will opportunities to add new flights - whether passenger or cargo - in 2006, 2008 and 2010.

Current limitations on destinations - five Chinese cities for US airlines, and 12 US ones for their Chinese counterparts - will be lifted.

On the US side, United and Northwest are to be the first carriers to benefit from the deal.

It was not immediately clear which Chinese airlines would be the beneficiaries.

An Air China plan at Shanghai's new Pudong International Airport
China's state run carriers are being restructured
Demand for air travel in China is expanding fast as the middle classes take more business and leisure trips, and Beijing is in the middle of consolidating the aviation business into three major carriers.

China's first private airline is to be set up this year and will serve western China, according to the technology company behind the project.

E & Net Communications, which wants to move into aviation, said it had applied for permits to launch Yinglian Airlines, which will be based in Chengdu, the capital of the south-western province of Sichuan.

"The new carrier is in the process of being established," said a spokeswoman for the firm, which is based in the southern industrial powerhouse of Guangzhou.

Budget airline plans

The head of China's airline regulator said last month that it was considering granting new licences to establish a budget airlines sector.

The Civil Aviation Administration of China (CAAC) director has received three applications but has not yet approved any, its director Yang Yuanyuan said.

New entrants to China's air travel market must meet CAAC safety standards, he stressed.

Despite the CAAC's willingness to consider budget airlines, analysts said the regulator would also need to loosen controls on ticket prices for a low-cost carrier to succeed.

Another problem facing the regulator is that China is already awash with financially shaky airlines.

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