United put out the usual fluff press release about how excited they are and all that jazz, but the really interesting stuff is in the actual DOT order. Click here to read all 24 pages in PDF form. For those who don’t want to read that much, here’s a summary.
First a little backfill. As part of the last agreement between China and US, air travel would be gradually opened up to more capacity over the years. This year, there were 29 weekly flights up for award and they all had to be awarded to airlines that already fly between the US and China (no newbies allowed).
Fifteen of those flights were for all cargo service. Polar, Fedex, and UPS all asked for 4, so they all got what they wanted and there were 3 leftover. Seven of those flights were for cargo or combination (cargo and passenger) flights between the US and China Zone 2. That means anywhere in China except for Shanghai, Beijing, and Guangzhou. Unsurprisingly, nobody wanted those frequencies.
That left us with 7 weekly flights (once a day) between the US and China Zone 1 – Shanghai, Beijing, or Guangzhou – and that’s what was so hotly contested.
As I mentioned in this previous post, American wanted flights from Dallas/Ft Worth to Beijing, Northwest wanted Detroit to Shanghai, Continental wanted Newark to Shanghai, and United wanted Washington/Dulles to Beijing.
After American was unable to come to agreement with their pilots to fly such a long route, they tried to amend their application to have a stop in Chicago/O’Hare. In today’s order, the DOT said that American was too late to do that, and if the agency allowed it, it would delay the start of the service. So, American was booted out of the running.
Starting on page 16 of the DOT order, you can read the meat of the findings. The agency was working hard to inject “as much nonstop capacity into the US-China market as possible.” The following reasons are why United’s bid was chosen over the others:
- Washington is the largest market in the US without any nonstop service to China (only SF, Chicago, and New York are bigger in overall demand)
- United offers the most seats (347 seat 747-400s) in their bid. This is slightly more than Northwest but a whopping 22% more than Continental
- Washington and Beijing, as country capitals, provide the best opportunity to improve convenience of travel for “government, academic, and industry representatives”
- United’s flights would connect to many other destinations in the Mid-Atlantic and East. Other airlines had argued that United already serves most of those cities via its Chicago service, but the DOT found that considering how full the Chicago flights are today, there is still plenty of opportunity to serve more people in the region
- United’s flights would also connect with partner Air China in Beijing to offer service beyond Beijing to 16 cities via a codeshare arrangement
As you can see, that’s a pretty strong argument. The DOT also acknowledged that other bids were good as well but just not as good as United’s. Northwest’s big downfall is that they currently serve all their China routes through their Tokyo hub. They could easily shift those flights to be nonstop from the US if they want but they have chosen not to. That certainly didn’t help their cause.
Continental’s bid appears to have lost because of the amount of service already flying between New York and China and the smaller size of the aircraft they would have used (777 vs. 747).
As I said before, I think they’ve made the right decision here. Congratulations to United on this victory. The order is still tentative as parties have 14 days to object, but I can’t imagine we’ll see anything that will hold up though.
Next up is another 7 weekly flights between the US and China Zone 1 beginning March 25, 2008. This time anyone can bid, even newbies, so it should get interesting.
