China's Airways Open Up

Six U.S. carriers have been awarded new routes to China.
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Six U.S. airlines have been awarded new routes to China, a historic development that will vastly increase the number of flights in the dramatically underserved aviation market between two major economic powers.

The routes mean Atlanta, Detroit and Philadelphia will gain first-time service to China, elevating them into an exclusive club -- just nine U.S. cities will have nonstop flights to the world's largest country.

Delta

(DAL) - Get Report

says it will begin flying Atlanta to Shanghai starting March 30. Also next year,

United

(UAUA)

can fly between San Francisco and Guangzhou, starting in March.

In 2009,

US Airways

(LCC)

will be allowed to go from Philadelphia to Beijing, and

AMR's

(AMR)

American will have the right to carry passengers between Chicago and Beijing.

Additionally,

Continental

(CAL) - Get Report

won a Newark to Shanghai route, and

Northwest

(NWA)

can fly Detroit to Shanghai. Northwest would become the first U.S. carrier to serve China with the new 787 jet being built by

Boeing

(BA) - Get Report

.

While the 2008 awards are definite, the 2009 awards are tentative, with final decisions expected shortly after allowing for public comment. The 2009 awards would become available on March 25.

"By bringing China and the U.S. one step closer, we increase our ability to compete, boost our success in the global marketplace, and make international travel for all passengers easier and more affordable," said Transportation Secretary Mary Peters, in a prepared statement. Peters announced the awards at an Atlanta press conference.

Most airline shares were trading higher Tuesday. Experts have suggested that each China route could be worth $200 million or more in annual revenue. Among the biggest gainers were Delta, up 5.1% to $16.85, and Continental, higher by 4.1% to $31.72.

Delta had been widely expected to win a 2008 route. Atlanta, the world's busiest airport, has no China service. Also, among the top five U.S. carriers with major international route systems, Delta is the only one lacking China service, and next year's award was designated for a new entrant.

"Delta's new flights to China will fill a critical void in air travel today by providing the 65 million residents of the Southeast with direct access to the world's fastest growing economy," said CEO Richard Anderson, in a prepared statement.

US Airways said its Philadelphia to Beijing flight will originate in Charlotte, the airline's largest hub. Philadelphia is currently the second-biggest metropolitan area without China service.

The announcement results from an agreement between the U.S. and China, signed in July, that aims to double the number of daily passenger flights between the two countries by 2012. Looking ahead, the pact allows U.S. airlines to add three more routes in 2010 and two each in 2011 and 2012.

Before the new flights, American and Continental each had seven daily China frequencies. Northwest had 21, flown from Tokyo, while United had 35. Also, three Chinese carriers serve the market, operating 39 weekly flights from New York, Los Angeles and San Francisco.

In selecting the 2009 routes, the Transportation Department rejected a variety of requests. For instance, it turned down Delta's bid for an Atlanta to Beijing route.

"By the time the 2009 frequencies are available for use,

Delta will have only been operating in the U.S.-China market for approximately one year," the DOT said. "Unlike American and Continental, it will not have had as much time to fully establish itself in the U.S.-China market."

Among new entrants, it rejected a request by MAXJet for a Seattle to Shanghai route in favor of the US Airways Philadelphia route. "US Airways would be in a better position to compete effectively with the incumbents" because of its superior connections, the department said.

The government also denied United's attempt at Los Angeles to Beijing service, noting that the carrier already has 50% of all U.S-China service.

"We tentatively believe that giving American and Continental the opportunity to offer additional service will allow them to compete more effectively with

United," the DOT said.