Competitive, geographic issues mean China flights bypass L.A.

As the crow flies, Los Angeles offers a quicker route to China than New York would. Not for U.S. airlines.

A combination of economic and geographic factors kept Los Angeles International Airport out of the mix when the U.S. Department of Transportation tentatively granted 14 newly opened weekly routes to China to two airlines as part of a bidding competition.

The winners were Continental Airlines Inc., which plans to start offering a daily nonstop service to Beijing later this year out of Newark's Liberty International Airport, and AMR Corp.'s American Airlines, scheduled to begin offering non-stop service to Shanghai next year from Chicago's O'Hare International.

While both carriers fly from LAX, neither considered offering non-stop service from Los Angeles. No U.S. carrier offers non-stop flights to China from L.A.--despite the region's vast Asian population and a growing business community traveling to China--and they are unlikely to for some time.

"Obviously, a big factor is the hub," said Kevin Schorr, research director at Campbell-Hill Aviation Group in Alexandria, Va. "If you look at American's network in Chicago, it's immense. And the connection possibilities are huge, including connections from some of the bigger metropolitan communities."

The new flights were awarded as part of a U.S.-China aviation agreement signed in July 2004 designed to increase weekly flights between the two countries to 249 by 2010 from the current 54. The DOT is taking public comment and a final decision is expected by March 9.

In announcing its decision, the DOT emphasized the connection possibilities at Chicago and Newark, bypassing a bid from Delta Air Lines, which intended to run its daily non-stop service to Beijing from its hub in Atlanta.

"Los Angeles would not be in the running for us," said American Airlines spokesman Tim Wagner. "If we had the opportunity to start more services in the future, Dallas/Fort Worth, our largest hub, would be at the top of the list if not the primary focus."

The only airline that might consider LAX a hub is UAL Corp.'s United Airlines, the largest operator at the airport. But United already offers non-stop service to Beijing and Shanghai from San Francisco International Airport, and sought in its bid to add seven daily flights to Guangzhou from there.

In choosing the carriers, the DOT said it was seeking both competitive and geographic balance among the nation's airports.

American got the nod for its Chicago flights in part because United already runs non-stop flights to Beijing and Shanghai seven times a week out of that market. The report also pointed out that no U.S. carrier offers non-stop service from New York, where the demand from business travelers for flights to China has surged in the last few years.

Michelle Lin, manager of East Travel Consulting Services in Green Brook, N.J., said travel time is another consideration--non-stop flights will take 17 hours from the East Coast, while the old routes took much longer due to layovers.

There is still a way to get there from here. The demand for non-stop service to China is being met at LAX by Chinese carriers. China Eastern Airlines offers non-stop service from LAX to Shanghai, while Air China offers non-stop service to Beijing. China Southern Airlines offers non-stop service to Guangzhou.

Many of the Chinese carriers came to Los Angeles in the 1980s, when no U.S. carrier was authorized for China-bound flights, said Dan Kasper, managing director of LECG LLC, an economic and financial consulting firm, in Cambridge, Mass. They obtained gates at LAX because it was not a hub and the region had a large population of ethnic Chinese.

The Chinese carriers also have agreements with U.S. airlines, which sell tickets under their name in exchange for a slice of the sales. The arrangement allows U.S. travelers to use their frequent flier miles on U.S. carriers and book tickets under names they know. American, United and Delta have such arrangements with Chinese carriers at LAX.

Those arrangements have legitimized many of the Chinese carriers to West Coast travelers, said Owen Imaizumi, director of product development in Asia for Pleasant Holidays in Westlake Village. Except in summer, seats are usually available for business travelers.

The demand for China-bound flights is likely to skyrocket in the next few years as business-people prepare for the Beijing 2008 Olympic Games.