Early History
In 1979, diplomatic relations between the People's Republic of China and the United States were established. Previously, there had been no air service between China and the United States after 1949 although there were flights between the United States and sections of China controlled by the government based in Taipei (Republic of China).
In January 1981, CAAC and Pan Am began flying between the People's Republic of China and the United States. Northwest Airlines resumed flying to China in 1984. Facing financial troubles, Pan Am sold its Pacific route authority, as well as aircraft and equipment, to United Airlines in 1985 leading to United Airlines operating former Pan Am routes over the Pacific in February 1986.
Hong Kong, which was previously a British Crown Colony until 1981 and a British dependent territory from 1981–1997, is now a part of the People's Republic of China but has a separate air agreement with the United States. Macau, formerly governed by Portugal but now governed by the People's Republic of China, also has a separate air agreement with the United States. The province of Taiwan is considered to be a part of China by both the People's Republic of China and the Republic of China, but the island is under defacto control by the government based in Taipei, not Beijing. Due to the severing of diplomatic relations with the Republic of China (Taiwan) by the United States in 1978 in order to establish relations with the People's Republic of China and because the mainland government does not control the province of Taiwan, there is no air service agreement between the United States concerning the province. However, there is an air service agreement between the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the United States.
Due to the small number of flights, air fares tend to be high between the two countries.
Although the stated goal of both countries is for an open skies agreement, the process of reaching such an agreement has taken several years and has not been completed. Liu Weimin, director of the Aviation Laws Research Centre with the Civil Aviation Management Institute of China, has said "Under the current market situation, local carriers have a hard time competing against global giants such as Continental. That is why US airlines are enthusiastic to fly to China, while Chinese carriers are hesitating to open more flights. For local airlines, more flights may mean more losses if they cannot get enough passengers." There have been reports that the load factors (percentage of seats sold) in business and first class are lower on Chinese carriers compared to U.S. carriers.
Not all of the route authority of the Chinese airlines is used.
Read more about this topic: Air Route Authority Between The United States And The People's Republic Of China
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