Results of trade talks pressure Chinese carriers
28 May 2007
Agreements from bilateral trade talks in Washington on Thursday will more than double the number of flights between the US and China. However, state-run carriers face new pressures from commercial independence and the flexibility of their American rivals, the Wall Street Journal reported. Beijing often orders carriers to purchase aircraft, even when unneeded, and requires airlines to buy jet fuel from designated suppliers at fixed prices that often are higher than international-market prices. The system is already facing strains ahead of the Olympics in Beijing next summer. A representative from the Centre for Asia Pacific Aviation believes the threat of intensifying competition will pressure Chinese airlines to squeeze operating costs and improve service. The big winners of the trade agreements are express delivery services, which are expanding by an average of 28% a year with a market that is set to grow to US$5.8 billion this year, according to Karen Chan of Credit Suisse in Hong Kong.