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American Airlines Begins China Flights on April 2: Shanghai Facts

Posted on: Tuesday, 14 March 2006, 09:00 CST

By D.R. Stewart, Tulsa World, Okla.

Mar. 14--On April 2, American Airlines will celebrate its 80th birthday with its first flight into China, inaugurating nonstop daily round-trip service between Chicago and Shanghai, the industrial and financial center of the nation of 1.3 billion people.

"Shanghai is a business market," said Don Casey, American's managing director of international planning. "It's a city of 17 million people, and it's the business and financial center of China.

"Hundreds of U.S. companies expressed interest and wrote letters of support of our application to begin China service. One of the big ones is Wal-Mart, which is sourcing goods from China. There is leisure (travel) demand as well, but what drives our decision is business."

Last March, the U.S. Department of Transportation awarded two U.S. airlines with China route authority: American's service to Shanghai from Chicago and Continental Airline's Newark, N.J.-to-Beijing route.

The DOT, in its final order awarding the Shanghai route to American, said, "The facts are that American's service would provide a competitive alternative to Northwest's and United's services in markets that generate many more U.S.-China passengers. American's position is further strengthened by its beyond-Shanghai connections (through its alliance with China Eastern Airlines) and the fact that it proposes service to Shanghai, the largest U.S.-China origin and destination market."

American's partnership with China Eastern Airlines is key to the success of the new route, officials said. The Shanghai-based carrier is the country's second largest airline, with 187 aircraft.

American executives said they are working with China Eastern to obtain U.S. authority to offer connecting service to nearly 40 cities within China.

On the Shanghai-to-Chicago route, American will offer its Chinese customers service to 75 percent of the U.S. population, including 65 cities in 31 states with round-trip flights.

"We expect 86 percent load factors the first year," Casey said, referring to the percentage of seats filled on each flight. "The market between the U.S. and China is growing at the rate of 500,000 passengers a year."

American will fly the 7,000-mile polar route to Shanghai on 245-seat Boeing 777-200 twin-jets. The westbound flight leaves Chicago O'Hare International Airport at 11:05 a.m. and arrives at Shanghai's Pudong International Airport at 2:15 p.m. the following day, local time.

The return flight departs Shanghai at 4:25 p.m., arriving in Chicago at 5 p.m. the same day, local time, after crossing the International Dateline.

American executives said the airline has sought China route authority for 14 years. Until 2005, only two U.S. passenger airlines were designated to serve China: Northwest Airlines and Pan American World Airways. In its effort to avoid a bankruptcy filing, Pan Am sold its China authority to United Airlines in 1985.

China is shaping up as an economic powerhouse of the 21st century. In the past 25 years, according to international economic development authorities, China has moved 300 million people out of poverty and quadrupled the average person's income.

U.S. exports to China during the past 15 years have increased 415 percent, while China's exports to the United States have grown by 1,600 percent, officials said.

By 2020, as many as 100 million Chinese could be flying abroad every year, up from 20 million in 2003, said the World Tourism Organization of Madrid, Spain.

While general commerce between China and the United States is expected to grow during the next 20 years, China is expected to be a major market for aircraft and aviation products, studies show.

Airbus SAS, the European commercial aircraft manufacturing consortium, forecasts that China will need 1,790 passenger and cargo aircraft over the next two decades.

Boeing Co., the Chicago-based commercial aircraft manufacturer, estimates China's air carriers will take delivery of 2,600 new commercial aircraft in the next 20 years.

"The 20-year China GDP is forecast to grow 6 percent per year and continues to lead the world," Boeing said in "Current Market Outlook," its 2005 estimate of world demand for commercial airplanes. "The growth of China's aviation sector in particular will significantly outpace growth of other world regions.

"The domestic China market is expected to grow an average 8.8 percent annually. Air travel for all markets to, from and within China is forecast to expand 7.8 percent annually for the region's carriers."

Casey said American has worked hard to prepare for the Shanghai service, including establishing Chinese menus and having two flight attendants who speak Mandarin, China's national language, on each flight.

"We're all very excited about this new route," Casey said, "and we're eager to get the next seven (China route) frequencies in 2007 when the DOT makes their determination on who gets them."

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Copyright (c) 2006, Tulsa World, Okla.

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Source: Tulsa World

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