An Air China aeroplane sits at a gate at Los Angeles International Airport in Los Angeles, the US, on May 24 2018. Picture: DANIEL SLIM / AFP
An Air China aeroplane sits at a gate at Los Angeles International Airport in Los Angeles, the US, on May 24 2018. Picture: DANIEL SLIM / AFP

Washington —  The Trump administration issued an order suspending passenger flights from China-based airlines, saying it was retaliation for Beijing barring American carriers from re-entering that market, in a continued escalation of tensions between the two nations.

The order issued on Wednesday goes into effect on June 16 but President Donald Trump can act sooner if he chooses, the department of transportation said in a statement.

US airline stocks rose amid a broad market rally and signs that travel demand is starting to rebound. A Standard & Poor’s index of major carriers jumped 7% at 11.20am in New York to the highest intraday levels since March 31. Alaska Air Group led the rally with a 9.7% surge to $39.72, followed by United Airlines Holdings’s 8.9% advance to $32.58.

The move ramps up tensions between the US and China, adding to disputes over trade, the coronavirus pandemic and the treatment of Hong Kong. On Friday, Trump said that the US would “begin the process” of eliminating the policy exemptions that allow the US to treat Hong Kong differently than the mainland. China’s leaders recently moved to impose sweeping new national security legislation on the Asian financial hub.

Beijing has prevented US carriers from restarting service there while four of its airlines have maintained flights to and from markets in the US in 2020 as Covid-19 erupted, according to the statement. US airlines had asked to resume service as early as June 1.

“The Chinese government’s failure to approve their requests is a violation of our Air Transport Agreement,” the department said in an e-mailed statement.

The order stops short of an outright ban, allowing Chinese carriers to operate one flight to the US for each flight that nation grants to American carriers.

The order is aimed at Air China, China Eastern Airlines, China Southern Airlines and Xiamen Airlines. The news came after the close of trading in Shanghai and Hong Kong, which are major trading centres for publicly held Chinese airlines.

Air cargo operations

It is not clear how the order could impact the burgeoning air cargo operations between the US and China.

Several US passenger airlines have begun flying cargo in empty passenger aeroplanes as they struggle for revenue during the unprecedented downturn caused by the virus.

At the same time, airfreight haulers such as FedEx and United Parcel Service have had to ramp up operations in China to fulfil demand for medical supplies and other equipment.

The trade group that represents large US carriers, Airlines for America, did not immediately comment on the action. China’s embassy in Washington also didn’t immediately respond to an e-mailed request for comment.

The department on May 22 said China had violated a bilateral agreement allowing airline service between the two countries by failing to respond to requests by Delta and United. The department accused China of unfairly blocking the carriers’ attempts to resume service in that country.

The department on Wednesday accused the Civil Aviation Authority of China of being “unable to communicate definitively” when it will allow US airlines to resume flights.

Delta originally sought to resume China flights on June 1 but has had to delay because the Chinese government has not approved its application. It is seeking to restart flights on June 11 between Detroit and Shanghai and Seattle and Shanghai, both with stops in Seoul.

“We support and appreciate the US government’s action to enforce our rights and ensure fairness,” the Atlanta-based carrier said in a statement.

American’s last China flights departed on January 31. It is set to resume flights between Dallas-Fort Worth and Hong Kong in July, with other passenger service scheduled to restart in October. American has an average of six total daily nonstop flights to the cities of Hong Kong, Shanghai and Beijing from Dallas-Fort Worth and Los Angeles.

United also plans to resume three routes to China as early as this month, pending regulatory approval. That would be for service from San Francisco to Beijing and Shanghai, and between Newark, New Jersey, and Shanghai.

In early January, there had been about 325 weekly scheduled flights between the two countries. That fell to only 20 per week by four Chinese carriers by mid-February, according to the department.

Earlier in 2020 China said in an order that airlines could not operate more flights than they had scheduled on March 12. However, by that time, US carriers were not flying there, making it impossible for them to resume service, the department charged.

China’s order “effectively precludes US carriers from reinstating scheduled passenger flights to and from China and operating to the full extent of their bilateral rights, while Chinese carriers are able to maintain scheduled passenger service to and from each foreign market served as of the baseline date, including the US,” the department said in its order.

Bloomberg