U.S., Hong Kong aviation negotiators reach deal to liberalize air services
1 hour, 23 minutes ago
By DIRK BEVERIDGE, AP Business Writer

HONG KONG - U.S. and Hong Kong aviation regulators agreed early Saturday to give airlines from both sides more access to each other's markets ¡X including a code-share arrangement for Cathay Pacific Airways and American Airlines.



Few details were immediately available on the deal that was several years in the making, but the pact would also give U.S. airlines ¡X presumably those carrying passengers and cargo ¡X more rights to fly into Hong Kong then onto other points.


"The new agreement will further expand Hong Kong's air services network; provide new business opportunities for Hong Kong airlines and further strengthen Hong Kong's status as an aviation and logistics hub," said Stephen Ip, Hong Kong's Secretary for Economic Development and Labor, in a statement.


Cathay, Hong Kong's de facto flag carrier, has long sought to put its own flight numbers on services offered in the United States by its alliance partner American Airlines ¡X a practice known in the industry as code-sharing.


The two have previously cooperated more loosely, for example by allowing one another's frequent fliers to get and spend miles on both airlines as part of the global oneworld alliance with other carriers including British Airways and Australia's Qantas.


A Cathay spokeswoman, Lisa Wong, said early Saturday by telephone that the new deal will allow for the code-sharing but she was not able to immediately provide more information.


The deal will allow Cathay to sell seats on American flights into U.S. cities beyond its international gateways such as San Francisco ¡X services it cannot operate with its own jets and crews because of U.S. regulations.


"It's an extremely positive development for travelers between the United States and Hong Kong and Asia," said Al Becker, a spokesman for American at its headquarters in Fort Worth, Texas. A code-sharing deal with Cathay would "open the opportunity for us to introduce the American Airlines brand into the Hong Kong market," Becker said.


American does not fly to Hong Kong, but its biggest rival, United Airlines, has services between Hong Kong and the United States, as well as flights between Hong Kong and Tokyo and Singapore.


The U.S. negotiators had been seeking greater rights for U.S. carriers ¡X both passenger airlines and cargo companies ¡X to fly into Hong Kong and then onto points in other markets, posing a potentially strong competitive threat to Cathay and Hong Kong's No. 2 carrier, Dragonair.


Cathay said it was disappointed by that part of the deal, which Wong called a "clear, unbalanced exchange" that favored U.S. airlines because Washington did not give Hong Kong's airlines equal access to the U.S. market.

As the talks resumed early Friday, a spokeswoman for the U.S. Consulate General said they were going well. The two sides eventually went into overtime, wrapping up the package around dawn on Saturday, one day beyond the scheduled three days for the latest round of discussions.

"Our negotiators report they have made good progress toward achieving an agreement that will significantly enhance opportunities in the passenger and cargo areas for U.S. and Hong Kong airlines," consular spokeswoman Susan N. Stevenson said. Stevenson said early Saturday she had no details on the agreement.