Airline lobbying groups are urging the Biden Administration to prevent Chinese airlines from adding service to the United States. I can’t help but find the argument to be weak…
Air service rights between the United States and China
For a bit of background, caps on air service between the United States and China are based on a bilateral agreement, which determines the number of flights that can be operated between the two countries. During the pandemic, we saw China impose unilateral restrictions on service, given the country’s approach to the virus.
Since then, we’ve seen service between the two countries restored at a slow pace. As of last week, the agreement between the United States and China was expanded to allow airlines from each country to collectively operate 50 weekly roundtrip flights between the two countries:
- This is still just a fraction of the pre-pandemic service, as prior to the pandemic, airlines from each country were allowed to operate 150 weekly flights
- However, the 50 weekly flights is more than the previous limit of 35 weekly flights, and the limit of 24 weekly flights before that, and the limit of 18 weekly flights before that, etc.
- That 50 weekly flights number is really low, and amounts to roughly seven flights per day for airlines from each country between the world’s two largest economies; just to put that into perspective, any of the individual “big three” US airlines operate way more flights between the United States and Italy in peak season than all US airlines combined operate between the United States and China
While we’re still only one-third of the way to service being restored, the US airline industry is now urging the government to not expand flight limits between the two countries any further.
US airline industry makes bad faith argument against Chinese airlines
A letter has just been sent to the Biden Administration that’s signed by an airline lobbying group (Airlines for America) and three unions (ALPA, APA, and AFA). Let me just share the entire letter, since it’s light on details:
On behalf of the U.S. aviation industry, we are writing to urge you pause additional passenger flights between the United States and the People’s Republic of China until U.S. workers and businesses are guaranteed equality of access in the marketplace, free from the existing harmful anti-competitive policies of the Chinese government.
Following the outbreak of COVID-19, China unilaterally suspended the bilateral air services agreement with the U.S. and effectively closed the market to U.S. carriers. During this period, the Chinese implemented strict limits on market access, as well as imposing challenging rules effecting operations, customers and the treatment of our airline crew. These actions demonstrated the clear need for the U.S. government to establish a policy that protects U.S. aviation workers, industry and air travelers.
The competitive disadvantage is harmful to the approximately 315,000 workers employed by U.S. passenger airlines that serve China. If the growth of the Chinese aviation market is allowed to continue unchecked and without concern for equality of access in the market, flights will continue to be relinquished to Chinese carriers at the expense of U.S. workers and businesses.
The anti-competitive relationship between the two countries is highlighted by the advantage Chinese airlines receive by continuing to access Russian airspace, while U.S. carriers stopped flying through Russian airspace at the start of Russia’s invasion of Ukraine in March 2022.
Even for those flights not operating through Russian airspace, there is still a competitive disadvantage with Chinese airlines enjoying certain protections stemming from the Chinese airline’s relationships with their government. This allows Chinese airlines to operate irrespective of standard market conditions. Much like the current and previous administrations have addressed anti-competitive practices and overcapacity with China, we believe the concerns of U.S. carriers today are no different.
We strongly urge the U.S. government to pause additional flights until U.S. workers and businesses are guaranteed equality of access in the marketplace without China’s existing damaging anti-competitive policies. We ask the government to take the time to address these significant competitive issues and protect U.S. aviation workers, travelers and airlines.
If I’m understanding this correctly, we should be capping flights between the United States and China because:
- It’s unfair that Chinese airlines can use Russian airspace, while US airlines can’t; however, there are many airlines flying to the United States using Russian airspace, ranging from Air India, to Emirates, to Qatar Airways, etc.
- It’s unfair that Chinese airlines are given “certain protections” based on their connection to the government; however, there are many airlines flying to the United States that receive all kinds of government support
Is this honestly the strongest argument that these organizations could come up with against stopping the growth of Chinese carriers in the US? Obviously the motivation here is entirely self-serving:
- China isn’t as lucrative of a market for US airlines as it was pre-pandemic, both due to increased tensions, and due to an economic slowdown in China
- US airlines aren’t even maxing out their existing allocation of flights to China, as there are more lucrative destinations they can fly planes to, especially with the increase in premium leisure demand
- For the flights that US airlines do operate to China, they’re charging way higher fares than they did pre-pandemic, and they want to keep it that way; this stance is about preserving high yields and maximizing profits
- Airlines outside of China have benefited greatly from the lack of nonstop flights between China and long haul destinations, as it has caused people to connect through other airports, pushing up transpacific fares
International travelers would benefit massively from increased transpacific service from Chinese airlines, regardless of whether or not one actually wants to travel to China. Who knows, if Chinese airline capacity is restored, maybe it’ll eventually be possible to find a Cathay Pacific business or first class award seat again.
Bottom line
US airlines want Chinese airlines to be blocked from adding more flights to the United States. US airlines argue that it’s not fair that Chinese airlines can use Russian airspace, or that they receive government support… yet that applies to a countless number of airlines.
The motivation is clear — US airlines don’t want yields across the Pacific to be driven down, so they want to do everything they can to stop Chinese airlines. I’m by no means a cheerleader for China, but c’mon, you’ve gotta make a better argument than this.
What do you make of this request from the US airline industry?
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