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U.S. Carriers Vie for China Rights

With a Transportation Department selection of a new route to China expected within weeks, applications by four U.S. airlines are suddenly in varying states of flux.

The stakes are high in the competition, with the winner gaining the right to begin flying March 25 from a U.S. hub to either Beijing or Shanghai. China service is extremely profitable, a result of high demand and limited routes because of a restrictive 59-year-old bilateral agreement that is slowly being expanded.

In recent weeks, American Airlines (AMR) has sought to revise its application for a Dallas-to-Beijing route after its pilots said the flight would require them to be on duty longer than their contract allows. The effort triggered a round of new filings by the four carriers.

Northwest (NWACQ), which is seeking a Detroit-to-Shanghai route, took the opportunity to re-emphasize an earlier suggestion that the award -- which actually involves seven weekly frequencies, rather than a single flight designation -- be split between two of the carriers.

Meanwhile, Continental (CAL - Get Report) and United (UAUA) are talking about a merger. Last week, Kevin Mitchell, chairman of the Business Travel Coalition, wrote to Transportation Secretary Mary Peters to advocate that the China award be postponed as a result.

If either carrier were awarded the route, and if the merger were to occur, Mitchell said, the new United and Continental would have 42 weekly U.S.-China frequencies, more than all other U.S. carriers combined.

"Such an outcome ... would have dramatic negative impacts for business travelers in terms of sharply higher airfares and fewer service options," he wrote in his letter.
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