United Airlines won tentative approval from the federal government to operate the first-ever nonstop daily flight between the U.S. and China--a route potentially worth $200 million a year.
The Department of Transportation's approval gives UAL's United a critical head start over its competitors on the highly coveted, burgeoning market.
The airline can begin nonstop service between Washington Dulles International Airport and Beijing's China Peking Capital Airport on March 25 if the tentative decision becomes final, the government said.
United beat out AMR's American Airlines, which sought to fly between Dallas/Fort Worth and Beijing; Continental Airlines, which applied for service between Newark, N.J., and Shanghai; and Northwest Airlines, which applied for Detroit-Shanghai service.
"Interested parties have 14 days to file objections showing why today's tentative decision should not be made final," the Transportation Department said in a press release. If objections are filed, answers are due in seven days and the department then will review comments and issue a final decision.
Strengthen Asian Network
The new route will 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 businessmen and politicians willing to pay first-class fares.
"It further cements their dominant position among the American carriers in Asia and adds to their merger value," said King, airline sector analyst at CreditSights.
The cachet of capital-to-capital flights was probably the deciding factor in United winning the route, he said.
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. United's service also would provide the greatest capacity, offering more than 253,000 seats annually, according to the government.
Final Choice Difficult
Transportation Secretary Mary E. Peters said the final choice was difficult, but "ultimately the goal is to do everything in our power to expand service, destinations and frequencies between the United States and China."
"United Airlines is honored to be selected as the first carrier to connect the governments, commerce and cultures of these two important capital cities," Glenn Tilton, United chairman, president and chief executive, said in a prepared statement.
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. Any mendment this late in the proceeding would "significantly delay the start of new service," the Transportation Department said. It allowed the carrier to withdraw its application as requested.
The 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.