Is China Playing Dirty With American’s New Los Angeles To Beijing Route?

Well here’s the latest never-ending drama in the airline industry…

American and Delta battled over LAX to Beijing

Last March, Delta announced that they planned to operate daily nonstop flights between Los Angeles and Beijing as of December 16, 2016. Exactly two weeks later, American announced that they planned to operate daily nonstop flights between Los Angeles and Beijing as of December 16, 2016.

Obviously the announcements coming just days apart is no coincidence. As it turns out, there was only one slot available for Beijing, so when Delta requested permission to fly the route, American quickly followed. I doubt the route would have been on American’s immediate radar, but when they saw that Delta was going to operate it, they wanted to make sure they got it instead. After all, American is trying to turn LAX into their Pacific gateway.

So over the following months the airlines had to make their case to the Department of Transportation about why they should be allowed to operate the route. In the end the DOT decided to grant the route authority to American, arguing that it would be American’s first flight from the west coast to Beijing, while Delta already operates a flight from Seattle to Beijing.

Seems simple enough, right? American was granted the authority, so should be able to launch the flight? Nope, not so fast.

China won’t give American any slots for Beijing

American has filed with the DOT, claiming that the Chinese aviation authorities are refusing to issue American a slot to operate a flight from Los Angeles to Beijing. They’re not even giving them an undesirable slot. In other words, the U.S. has granted American the right to operate the route per the bilateral agreement between the countries, but China doesn’t want to let the flight land in Beijing. Per the filing:

On January 18, 2017, the CAAC rejected American’s request for slots at Beijing Capital International Airport for nonstop service to Los Angeles. The CAAC did not, as it had done in the past, even offer American slots at commercially non-viable times, such as between midnight and sunrise when few passengers want to takeoff or land. Even though American was recently awarded the US-China frequencies and necessary exemption authority from the Department to inaugurate Los Angeles-Beijing service, American cannot serve this route without slots in Beijing. To date, the CAAC has refused to provide any slots to allow American to exercise its bilaterally conferred rights.

One could certainly argue that China is trying to protect their own carrier here. Air China operates up to 3x daily flights between Los Angeles and Beijing, and has no competition. Given that the airline is largely government owned, I can certainly see why they’d think there’s foul play involved.

American-787-Business-Class - 2

American wants the DOT to take away Air China’s Houston to Beijing flight

Since technically American doesn’t really have a way of petitioning the CAAC, they’re instead petitioning the DOT to take action in an indirect way. Air China has filed for renewal on their Beijing to Houston flight, and American is asking the DOT to take these operating rights away, on the grounds of China not playing fair. Per the filing:

American objects to the application of Air China for renewal of its exemption authority to operate scheduled service between Beijing, People’s Republic of China, and Houston, Texas. American recognizes that Air China has timely filed for renewal of its authority and does not take issue with any aspect of Air China’s operation of this service; rather, American bases its objection on the failure of the Civil Aviation Administration of China to make commercially viable slots at Chinese airports available to American and other US carriers on a reciprocal basis.

As American recently explained in a similar proceeding, US carriers are often unable to obtain commercially viable slots at airports in mainland China that are necessary to operate US-China services. Chinese carriers, by contrast, hold large slot portfolios at Chinese airports that they use for their own US-China services, and they face no comparable limitations at US airports. This disparity provides Chinese carriers with a significant competitive advantage in serving US-China routes, and deprives the United States of the full level of US carrier-operated services authorized by the U.S.-China Civil Air Transport Agreement, as amended.

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Bottom line

On some level it seems like there’s some foul play here. While American isn’t technically entitled to a landing slot in Beijing, that’s not the sprit of the bilateral agreement, given that they’ve been granted the authority to operate the route by the DOT. With major Chinese airports being more strictly slot controlled than U.S. airports, the U.S. carriers certainly have a harder time expanding to major Chinese airports in the way they want.

It’ll be interesting to see whether their approach of asking the DOT not to renew Air China’s Houston route works, though.

Comments

  1. Regardless of who’s right and who’s not.
    Is it only me or North American (AA,CA,DL,etc) all have accused other airlines for not playing fair?
    What about them ?
    It can’t be that they’re the ONLY airlines playing fair and everyone is else is cheating.
    Look at the bigger picture….

  2. Look at the rest of the docket. Unfortunately it seems the DOT approved Air China’s extension for 2 years (a day before AA’s response was filed?). However, AA did say that any time a Chinese would file for slots (or extensions) that AA would object.

  3. Nothing to do with “foul play” here or protecting Air China.

    This is all political maneuvering on the Chinese government’s end. They have not been pleased with some of Donald Trump’s stances towards them.

    This is pretty poor form on the Chinese government’s part.

  4. Yeah, probably going to be pretty tough getting China’s cooperation on anything as long as the US continues to threaten a trade war and continues on its path to recognizing Taiwan independence. Words and actions have consequences and this may very well be just the beginning. Pretty much guaranteed that if the Houston slot is taken away, this will not be the only American slot that is taken away in China. Nobody wins a trade war.

  5. Lucky,

    As a matter of fact, CAAC did not reject AA because they are playing dirty, they did so because no additional capacity is allowed at PEK. As of now, CAAC would not award ANY carrier ANY slot at PEK, PVG or SHA. During the review of last year’s on time performance, these airports did not meet the standard set by CAAC. As a result, CAAC ruled that no additional capacity shall be added to those airport in the short term, until they have a better on-time performance.

  6. yes as DCG pointed out, no additional slot will be added to PEK until overall on-time performance is improved.

    Not just PEK but a number of other airports such as PVG, HGH, NKG and FOC received such capacity ban. Believe the ban still remains effective in PEK

  7. Of course they are playing dirty, it’s what they do. Is that not obvious by now? Glad to finally see a post somewhere on boardingarea not bashing US carriers.

  8. This is how the CCP is. To do business in China, you have to grease palms. AA probably didn’t grease any or not enough. The current leadershipn in China says they’re cracking down on corruption? Gimme a break.

  9. Wow your title is almost Fox News click bait worthy.

    The slot wasn’t granted because of capacity. You may want to keep your anti-China aggression to your self on this one.

  10. Getting slots in PEK is just as difficult, if not more, as LHR these days….not just for AA but also for any Chinese carriers (well..air China could be an exception)

  11. I’m sure AA/DL/UA are greasing the domestic palm just as hard & have been quite successful at that. China has every right to protect it’s own business whether semi-owned by gov or not. Now you cannot expect to go into any other country and demand been treated like it’s home, that only applies to illegals in the usa.

  12. Supreme leader trump must build a floating smart wall that will prevent Chinese airlines from coming to the US (and Mexico will pay for it).

  13. China doesn’t have any slots open for a US airline, because they are all taken up by their own government airline flying that route 3X daily. Air China is ‘entitled’ to 3 slots at LAX, but AA is not entitled to any slots at all.

    This is exactly what Trump has been saying all along. There is already a “trade war”, but up until now only the Chinese have been fighting it. China has been acting out “China First”, while the US has been naively thinking we were all in a fair global marketplace. Trump wants to push back on that, not to close off trade, but to open up opportunity for American businesses.

  14. @Robert Hanson – Agreed 100% We are dealing with a global adversary that does not believe in free, fair open trade. Therefore, we should allow their airlines exactly as many slots as they give our airlines.

  15. Apparently PEK and PVG are banned for increasing slots due to bad punctuality by CAAC, hence any carrier cannot increase frequency let along an US carrier. But who knows the real reason? It could be anything from economical to political or preferential…

  16. @Dcg the rule only regulate domestic flight only
    In deed CAAC do not really strictly carry out the rule, those airport can still increase flight in Chinese lunar new year.

  17. To be fair, Air China should give up at least one slot in PEK to AA if they would like to keep flying to LAX.

  18. @orion
    air china did this last time by giving one slot at pek to aa, instead aa gave their one slot at lhr to air china. they should do the same thing…

  19. @bsp
    Good to know the past slot trade. It is ridiculous to see Air China flies 3x daily between PEK and LAX, while AA can’t even do one.

  20. @dcg that ban only applies to PVG, SHA, URC and TSN as of 22 January 2017 (CAAC’s latest notice). PEK was never on the list in 2016 AFAIK.

  21. American Airlines does not need the LAX Beijing route when they already have 2 daily non stop flights from the US to Beijing. One from Dallas and another from Chicago. Don’t be such a chazzer American.
    They already have 3 daily flights to Shanghai and 2 to Hong Kong. How about expanding to other parts of Asia ? Vietnam is an emerging market .

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