Hong Kong airline talks resume.

Byline: John Schmeltzer

Aviation talks aimed at increasing competition in the Hong Kong market are due to resume Tuesday, with two U.S. carriers hoping that Hong Kong and U.S. authorities will ease restrictions.

For Fort Worth, Texas-based American Airlines, the world's largest carrier, a deal would allow it to launch nonstop service from Chicago and establish a code-sharing agreement with Hong Kong-based Cathay Pacific Airlines.

For Elk Grove Township, Ill.-based United Airlines, the world's second-largest carrier, a deal would allow it to provide additional service to destinations beyond Hong Kong, including mainland China.

But just like the open skies talks the United States has been holding with Britain for the past decade, there is no guarantee that the latest round of talks will provide a breakthrough that allows increased competition in Southeast Asia.

"We frequently are disappointed," said John Moss, managing director of international and regulatory affairs for United.

Five times transportation officials from the United States and Hong Kong have sat down intent upon obtaining an agreement. Each time they have failed due to the insistence by U.S. airlines for an open sky agreement that would allow them to fly wherever they want.

Instead, Hong Kong officials have said they only will consider a liberalization of the current agreement that limits United to 21 flights per week beyond Hong Kong _ 14 to Tokyo and seven to Singapore.

American, which currently has the right to offer service to Hong Kong from the United States, is prohibited from offering service from its Asian destinations. It says it would launch nonstop service from Chicago if it receives the right to code share with Cathay Pacific.

Cargo carriers are allowed eight flights to destinations beyond Hong Kong. They want the rights to operate 145 flights per week beyond, but Hong Kong authorities have indicated they are likely to give approval for a total of 65 flights.

"It is very frustrating to be dealing with this. This is a very closed market. Like (Britain), Hong Kong is very protective of its national carrier, which is Cathay," said Moss.

David Cush, vice president of international planning and alliances for American and Moss' counterpart, said he is hopeful an agreement might be near. "Our position is, let's get what we can right now," he said.

As in the 1980s, when American turned O'Hare International Airport into its European gateway, Cush said the airline hopes to accomplish the same thing with Asia.

"This is part of our strategy of making Chicago our primary gateway to Asia," he said. "We have a great opportunity to go in and drive some liberalization on this agreement."

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