UAL, Northwest Win China Routes

The Department of Transportation gave United Airlines, a unit of UAL ( UALAQ.OB), and Northwest Airlines ( NWAC) authorization Friday to add new daily flight from the U.S. to China.

The new service to China, which amounts to seven flights a week for both carriers, marks a first step in an ongoing expansion of air travel to China, the result of a new aviation agreement between the U.S. and China reached on June 18. The agreement will be signed by Transportation Secretary Norman Mineta and Civil Aviation Administration of China Minister Yang Yuanyuan at a ceremony in Beijing on Saturday.

Northwest will add a flight between Detroit and Guangzhou, becoming the first U.S. carrier to serve the Chinese destination with a stopover through Tokyo. United will add a daily nonstop between Chicago and Shanghai.

Going forward, service to and from China will increase dramatically. Currently, four U.S. airlines -- United, Northwest, UPS ( UPS) and FedEx ( FDX) -- fly a total of 54 flights a week to China. Over the next six years, under the agreement, service to the world's most populous nation will quintuple, with 249 weekly total flights. This year, U.S. carriers were allowed to add a total of 14 weekly flights, with Northwest and United splitting the new allotment.

The move towards China will be extremely lucrative not only for airlines who carry passengers, but also for those who carry cargo. This year, the DOT will allow another airline a chance to serve the Chinese market with all-cargo flights, joining Northwest, FedEx and UPS. Eventually, provisions in the U.S.-China agreement will allow U.S. cargo carriers to establish shipping hubs in China.

With billions of people and so much untapped potential, the Chinese market is expected to be a huge source of growth, especially in shipping. Already, UPS has seen the benefit of targeting Asia, with second-quarter earnings growth fueled by strength in international shipping, driven by a 70% increase to average daily package volume in China.

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