This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

United Leads in China but American and Delta Want Bigger Shares

Chengdu, China (TheStreet) -- A San Francisco/Chengdu flight, which first operated on June 9, underscored United's (UAL - Get Report) standing as the leading U.S. carrier to China.

But recently, being No. 1 to China hasn't been such a big advantage as it once was. For the moment, too many airlines are adding too much China service in too short a time.

Last week, as United added San Francisco-Chengdu on a Boeing (BA) 787, American (AAL - Get Report) added Dallas to Hong Kong and Shanghai on a Boeing 777, and Delta (DAL - Get Report) added Seattle-Hong Kong on an Airbus A330.

The routes and aircraft show that United is ahead, using an improved airplane and a better trans-Pacific hub to add service to a destination that appears underserved. At the same time, as the largest carrier between the U.S. and China, United has the most to lose when competitors grow.

The Chengdu flight marked the first time any commercial airline has ever flown non-stop between North America and China's interior, as well as the first non-stop flight ever from North America to a non-"tier one" city under the U.S./China bilateral aviation agreement, which Walter Dias, United's managing director for Greater China & Korea, calls "the most important bilateral relationship in the world."

The flight was made possible by two paragons of U.S. commercial aviation: United's San Francisco hub and Boeing's 787, the smallest airplane that can carry enough fuel to fly an untried 6,857-mile route. "We couldn't do the flight without the 787," Dias said. "It opens up possibilities that were not here 10 years ago." United has taken just 10 of the 65 B787s it has ordered.

The fourth-largest city in China, Chengdu is home to 14 million people. Half of the Fortune 500 companies have Chengdu offices and Ford (F)has its biggest non-U.S. plant in Chongqing, 165 miles away. In October, Marriott (MAR) subsidiary Ritz-Carlton opened a 353-room Chengdu hotel, its tenth in China.

Chengdu Shuangliu International is China's fourth-largest airport. Western airlines arrived in 2006, when KLM began Amsterdam service. British Airways began thrice-weekly 777 service in September, then switched in May to 787 service five times a week. United is starting out with three flights a day.

Chengdu paid incentives for British Airways to start service, CEO Willie Walsh said in April. Sources said United also received a break or waiver on landing fees. United spokeswoman Mary Clark declined to comment on incentives.

Dias said the Chinese government is committed to "help the west catch up" with Beijing and Shanghai. "Investment dollars are flowing from Beijing to the west," he said. The commitment includes plans to build a new Chengdu airport within five years. "We feel very bullish about Chengdu," he said. "It is very business-oriented."

As for leisure travel, Chengdu boasts the Chengdu Research Base of Giant Panda Breeding, a world-famous panda breeding site. Aviation consultant Mike Boyd called the Chengdu flight "incredible, the start of service to interior China" and said "it will pay off like a slot machine."

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAL $48.40 -1.13%
DAL $44.39 -1.68%
UAL $67.92 -1.09%
AAPL $126.41 -1.66%
FB $81.21 0.39%

Markets

DOW 18,135.72 +38.82 0.21%
S&P 500 2,101.04 +2.51 0.12%
NASDAQ 4,982.8090 +15.6680 0.32%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs