WITH BILATERAL AGREEMENTS SECURED, FEDEX PLANS MORE HONG KONG SERVICE

WITH BILATERAL AGREEMENTS SECURED, FEDEX PLANS MORE HONG KONG SERVICE

Federal Express Corp., wasting no time in taking advantage of new bilateral aviation agreements, plans to expand service to Hong Kong, a top FedEx official said.

FedEx's plans to expand in Asia were stymied by a heated dispute between Tokyo and Washington over the carrier's right to serve Osaka's Kansai International Airport from its new Asian cargo hub at Subic Bay. But the possible U.S. sanctions against Japanese cargo carriers prompted Tokyo to settle the issue in July, allowing FedEx to inaugurate its AsiaOne overnight delivery network from Subic Bay on Sept. 4.The dispute delayed the Subic Bay opening for weeks. The area also has been hit by three major typhoons this year; the latest slammed the region Sept. 26. But business at the Subic Bay facility is exceeding FedEx's expectations, said Joseph McCarty, a senior vice president for the carrier.

Mr. McCarty had been in charge of FedEx's Asia-Pacific division since 1991. This month, he was tapped to oversee the company's new Latin America-Caribbean division.

"We are extremely pleased with the initial operations at Subic Bay," Mr. McCarty said. In the month that AsiaOne has been operating, "We are already seeing some volumes from Asian customers that we didn't expect to see this early, and the shipments are exactly the kind of high-value goods, like electronics, that we aimed for."

Mr. McCarty said FedEx is planning to offer some special AsiaOne rates at the end of October to entice still more customers to use the company's services.

Meanwhile, Mr. McCarty said FedEx is moving forward with plans to open a second Asian transshipment center in Taipei, Taiwan. At first, "the Taipei transshipment center wouldn't be as full-blown as Subic," Mr. McCarty said, but the company's strategy calls for the Taipei base to expand as Asian business increases.

FedEx also anticipates new opportunities from the aviation accord reached between the United States and Hong Kong on Sept. 29, Mr. McCarty said. The accord, effective immediately, significantly expands U.S. carrier rights to Hong Kong and, importantly, protects those rights when Hong Kong returns to Chinese sovereignty in 1997, U.S. Transportation Department officials said.

The agreement allows U.S. carriers a total of eight "fifth-freedom" flights each week to Hong Kong. The rights, which allow airlines to fly to points beyond Hong Kong after landing there, are a critical benefit for time- sensitive shipping companies such as FedEx, whose strategy is based on interweaving networks rather than serving pairs of cities. FedEx has a flight

from Anchorage to Hong Kong via Tokyo, but will not be able to serve Hong Kong

from the Subic Bay hub until it is granted fifth-freedom rights, a FedEx spokesman said.

The DOT has not asked airlines to submit requests for the new Hong Kong routes, but as soon as the agency does so, FedEx intends to apply, Mr. McCarty said.

If FedEx is awarded any of the Hong Kong rights, the company will use Airbus A310s to serve them, he said.

"The A310 is the perfect-sized aircraft for market development, and it has a common container cargo system with the rest of our fleet," he said.

FedEx owns three A310s, and has another 20 of the aircraft on order to enter the fleet by the end of 1997.