DOT picks United for service to China

DOT picks United for service to China

	Published : Wed, 10 Jan 2007 04:38 By : Agencies Print this Story

WASHINGTON - United Airlines won tentative approval on Tuesday to operate the first nonstop daily flight between Washington and Beijing, a 14-hour trip that links the countries' capitals as their economies become more intertwined.

The Department of Transportation's final OK would give UAL Corp.'s United a route coveted by executives and government officials and potentially worth $200 million a year.

Washington-based fliers who make regular trips to Beijing applauded the news.

'It means that I probably save two to three hours in my flight,' said Richard Bush, a senior fellow at the Brookings Institution. 'Anything that gets you into the hotel ahead of the evening rush hour (in Beijing) is great.'

United did not immediately say how much it would charge for the flight. Existing fares for travel between Washington and Beijing start at under $1,000 for economy class and can top $15,000 for first class.

If it wins final approval from the government, the Elk Grove Village, Ill.-based airline can begin nonstop service between Washington Dulles International Airport and Beijing Capital International Airport on March 25.

'It's overdue,' said James Millward, an associate professor of Chinese history at Georgetown University. 'It shortens the time and shortens the fatigue that is part of international travel.'

United beat out AMR Corp.'s American Airlines, which sought to fly between Dallas/Fort Worth and Beijing; Continental Airlines Inc., which applied for service between Newark, N.J., and Shanghai; and Northwest Airlines Corp., which applied for Detroit-Shanghai service.

The Transportation Department said United's rivals have 14 days to file objections.

The new route would strengthen United's already-extensive Pacific network and provide an injection of cash when the carrier is still trying to regain its former financial strength after a three-year bankruptcy restructuring that ended in February.

Airline analyst Roger King estimated that the route could bring United roughly $200 million a year in additional revenue, based on daily 16,000-mile round-trip flights. The flights, he said, are certain to draw executives and politicians willing to pay business-class fares, which can cost as much as $10,000.

'It further cements their dominant position among the American carriers in Asia,' said King, airline sector analyst at CreditSights Ltd.

The cachet of capital-to-capital flights was probably the deciding factor in United winning the route, King said, though he and other analysts said alternate regions of the U.S. and China would be better served by more nonstop service.

Terry Trippler, an airline travel analyst based in Minnesota, said a flight to Shanghai -- the industrial and financial center of China -- would have offered more economic benefits and he predicted it is likely to get stronger consideration for the next U.S. route in 2008.

The government said United's proposal had the potential to benefit the greatest number of passengers, since more people travel to China from the Washington metro area than any other city that does not have nonstop U.S.-China service. United's service will offer more than 253,000 seats annually, the government said.

United noted that customers traveling from Dulles to Beijing will be able to connect to flights to 16 Chinese cities through its alliances with Air China and Shanghai Airlines.

American Airlines tried to make a last-minute change to its proposal to add a stop in Chicago before continuing to Beijing, but the government on Tuesday denied that motion. The carrier said it was disappointed in the decision and that it would reapply for additional China service. Northwest echoed those sentiments.

The Transportation Department evaluates U.S. air carrier proposals for new U.S.-China service as part of an aviation agreement between the two countries signed in July 2004 that called for a total of 195 new weekly flights phased in over a six-year period.

Shares of UAL added 4 cents to end at $46.84 on the Nasdaq Stock Market, while AMR rose 63 cents to close at $34, and Continental added $1.10, or 2.5 percent, to $45.72, both on the New York Stock Exchange.

AP Business Writer Dave Carpenter in Chicago contributed to this report.

(SUBS 6th graf to correct name of Bejing airport.)