Vice-Premier Wu Yi listens during the beginning of the US-China Strategic Economic Dialogue hosted by US Secretary of Treasury Henry Paulson in Washington yesterday.Reuters

The US is expected to push for talks with Chinese officials aimed at increasing commercial flights between the two countries, but Chinese airlines may not be ready for such a deal.

The United States wants an "open skies" deal, similar to the one it has with Europe.

The United States expects to reach a "meaningful agreement" with China this month in the strategic economic dialogue, US Transportation Secretary Mary Peters said during her visit to Beijing last month.

An official with the industry watchdog General Administration of Civil Aviation, speaking on the condition of anonymity, confirmed this was open for discussion. "China would like to work toward open skies, but we must proceed step by step".

The Chinese civil aviation industry operates about 900 aircraft in total while Dallas-based American Airlines alone has a fleet of over 900 jets. Apart from the relatively poor service quality, especially for premium customers, Chinese airlines' marketing is weak and their brands need development and promoting.

"A further liberalized aviation agreement would definitely be bad news to Chinese airlines," Li Lei, an aviation analyst with CITIC China Securities, said.

China and the US already held two rounds of aviation talks in January and March this year, but nothing new was achieved.

The passenger numbers on the Sino-US routes has been growing 17 percent per year, but the number of seats available is increasing only 13 percent annually, figures from US Department of Transportation show.

"At the end of the day, open skies is inevitable everywhere," David W. Dickson, Ernst & Young's global airlines industry leader, said.

Dwarfed by their US rivals, Chinese airlines should focus on improving their business on existing routes by strengthening Chinese passengers' loyalty and attracting more premium travelers, analysts said.

"The key for the Chinese airlines is how to build their relationship with Chinese people," Dickson said.

"The British people fly British Airways. Most people still fly the airlines they are accustomed to."

Li said Chinese carriers should also improve their services to attract high-end passengers.

"In today's highly competitive aviation industry, an airline can only choose either type of the two models: targeting premium passengers, like Cathay Pacific and Singapore Airlines, or adopting low-cost strategies, like Southwest Airlines and JetBlue. The road in-between would only be a dead end," Li said.

In 2004, China and the US signed an expanded air service agreement that allows the number of weekly flights between the two countries to increase nearly fivefold, from 54 weekly round-trip flights to 249 at the end of a six-year phase-in period.

(China Daily 05/23/2007 page2)