The U.S. Department of Transportation has selected United Parcel Service as the fourth U.S. carrier entitled to serve the lucrative U.S.-China market. UPS will get six of the 10 new frequencies available to U.S. carriers as of April 1, 2001, with market incumbents getting the rest - two to United Airlines and one each to FedEx and Northwest Airlines.
'Our people will use this opportunity to improve service for all international business in and out of China and to create additional jobs here in the United States,' said Jim Kelly, chairman and chief executive of UPS. UPS said it plans to offer four flights a week originating in Ontario, Calif., and two a week originating in Newark.
In announcing the decision, Transportation Secretary Rodney Slater said he is committed to further liberalization with China.
UPS competed with American Airlines, Delta Air Lines and Polar Air Cargo for the hotly contested fourth carrier designation.
Ned Laird, managing director of the Air Cargo Management Group in Seattle, said the decision represents a rare triumph for cargo interests over passenger interests.
'It certainly indicates the anticipated growth in demand for express and freight traffic between the U.S. and China after WTO entry,' he said, referring to China's admission into the World Trade Organization, expected for later this year or early 2001.
UPS had sought all 10 new flights available to U.S. carriers as of April 1. While it did not get all that it asked for, the decision nonetheless represents a substantial victory for UPS, which waged an intensive lobbying campaign over the past year to win the China rights. FedEx, which currently has 10 flights a week to China, has asked for eight more.
According to Ed Wolfe, a securities analyst with Bear Stearns, UPS officials have indicated that their revenue in China could jump from the present level of $100 million annually to $300 million within two years if they won all 10 of the new flights.
Meanwhile, American and Delta may also be able to begin flying to China through code-share agreements with their Chinese partners, China Eastern Airlines and China Southern Airlines.
DOT said U.S. and Chinese officials had met in Seattle on Oct. 20 to discuss such an arrangement. Such agreements would be subject to approval by both governments.