US and Hong Kong agree air services pact

Hong Kong and the US broke a three-year deadlock by agreeing terms on a new air services pact, effectively giving Hong Kong flagcarrier Cathay Pacific the right to serve virtually all major US destinations and American carriers greater access to Asia's lucrative skies.

The deal, first proposed six years ago, includes a code-sharing partnership between Cathay and its Oneworld alliance partner American Airlines.

US cargo carriers are also seen as winners, being granted more freedom to carry cargo from Hong Kong to other Asian destinations.

"I am glad that following four days of talks, we have reached agreement with the United States this morning to further liberalise our air services arrangements," said Secretary for Economic Development and Labour Stephen Ip.

"The agreement enables the airlines of both sides to expand both cargo and passenger services and introduce code-share arrangements."

Ip said the deal would provide new business opportunities and strengthen Hong Kong's position as an aviation and logistics hub.

"The increase in capacity and frequency for both cargo and passenger services will also make our air services more competitive," he said.

As of now, Cathay is limited to serving serving seven US cities with its own aircraft.

Cathay in a statement welcoming the codesharing pact, however took a swipe at what it deemed "US protectionism."

"Cathay Pacific is disappointed with the outcome of the fifth freedom discussion which is a clear unbalanced exchange in favour of the US carriers," it said.

The term "fifth freedom" means the right to carry passengers of another country to a third country.

"The US negotiation team has achieved major success for the US carriers. We are disappointed with the US protectionism, which denies Hong Kong carriers equivalent commercial opportunities," Cathay said.