Two US airlines cut China routes as Beijing rivals turn up heat

American Airlines, the largest US carrier by passengers, said it would drop a route between Chicago and Shanghai. (Reuters)
Updated 22 August 2018
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Two US airlines cut China routes as Beijing rivals turn up heat

  • ‘The two China routes ... have been colossal loss makers for us’
  • Chinese passengers arriving at US airports are expected to nearly triple to 12.8 million in 2024 from 4.3 million this year

DENVER/SHANGHAI: Two US airlines on Tuesday cut routes between China and the US, underscoring increasingly tough competition from state-backed Chinese rivals as they aggressively expand their fleets with cut-price tickets.
American Airlines, the largest US carrier by passengers, said it would drop a route between Chicago and Shanghai, canceling the second direct flight from the US city to China in four months. It had canceled a flight to Beijing in May, although it still operates daily flights to the capital from Los Angeles and Dallas-Fort Worth, Texas.
“The two China routes ... have been colossal loss makers for us,” said Vasu Raja, vice president of network and schedule planning, adding that high fuel costs had also made the route unsustainable.
Hawaiian Airlines said it would from October suspend its thrice-weekly nonstop service between Honolulu and Beijing, which it opened in 2014, citing slower-than-expected growth in demand.
Competition from Chinese airlines is expected to grow with the anticipated easing of China’s near-decade-old “one route, one airline” policy, which would allow more local airlines to fly long-haul international routes.
“US airlines are at a severe disadvantage,” said Mike Boyd, president of aviation forecaster Boyd Group. “The majority of demand is China-generated, and that gives Chinese carriers the advantage.”
Chinese passengers arriving at US airports are expected to nearly triple to 12.8 million in 2024 from 4.3 million this year, and the profile is shifting from groups to independent travelers, according to Boyd Group.
United Airlines President Scott Kirby said Shanghai and Beijing had rebounded for the airline after several years of weakness, although revenue per available seat mile (RASM) was below levels of two or three years ago.
“We’ve had several years of weakness as there was an awful lot of capacity growth out of Beijing and Shanghai,” Kirby said on the sidelines of the International Aviation Forecast Summit in Denver.
American and Hawaiian said the route cancelations were unrelated to demands placed by China’s civil aviation regulator on foreign airlines to amend the way they referred to Hong Kong, Macau and Taiwan on their websites.
Chinese state media had earlier this month singled out the two companies and other US airlines as being among the last firms to comply with China’s demands.
“That issue of how Taiwan was displayed on our website had absolutely zero impact on this decision,” Hawaiian’s chief executive, Peter Ingram, said. “Our economic evaluation was well underway long before that issue arose.”


UAE signs $5.5bn in military contracts

Updated 4 min 56 sec ago
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UAE signs $5.5bn in military contracts

  • Gulf Arab states, including the UAE and Saudi Arabia, have long been major buyers of US weapons but have beefed up military purchases in recent years from other countries
  • The UAE awarded deals to firms from Russia, Turkey, Pakistan and South Africa at the five-day IDEX military exhibition

ABU DHABI: The UAE awarded 20 billion dirhams ($5.5 billion) worth of defense procurement contracts during a defense show this week, a military spokesman said.
The majority were awarded to international companies such as US firms Lockheed Martin and Raytheon, which sealed one of the biggest deals with 7 billion dirhams worth of contracts related to its Patriot missile air defense system.
Gulf Arab states, including the UAE and Saudi Arabia, have long been major buyers of US weapons but have beefed up military purchases in recent years from other countries. This week, the UAE awarded deals to firms from Russia, Turkey, Pakistan and South Africa at the five-day IDEX military exhibition.
Saudi Arabia signed agreements this week at IDEX to develop its domestic defense industry as the Kingdom, the world’s top oil exporter, seeks to diversify its economy away from oil. Saudi Arabian Military Industries (SAMI), the Kingdom’s state defense company, signed partnerships with France’s Naval Group, Spain’s Navantia, and Abu Dhabi state fund Mubadala.
SAMI, established in May 2017, seeks to localize 50 percent of military spending by 2030.