China is much in the news lately. Most recently, the financial press was abuzz that IBM had decided to sell its PC business to Chinas Lonovo Group, Asias largest PC maker, for $1.25 billion. With names and numbers like that, the deal instantly came to be viewed as a confirmation that Chinas efforts to get plugged into the global economy are bearing tangible fruit.

Less noticed, but reported in our news pages today, is another notion that could signal a change in the way we think about China -- the prospect of cheap seats.

The Transportation Department is evaluating proposals to take advantage of the rare opportunity to open the China market to additional airlines. A half-dozen U.S. carriers are vying for newly available route rights, including tiny North American Airlines.

In cases such as these, where the route rights are limited and therefore valuable, the U.S. has often awarded the routes to big airlines with big hubs, on the theory that they could extract the maximum public benefits from a scarce resource in terms of the number of seats, number of connecting possibilities, feed traffic, etc.

Not this time, says North American. The New York-based carrier has been quietly operating in charter and scheduled niche markets for the last 14 years, and it now proposes to do something nobody else has thought of doing: offering a low-fare service to China.

The carrier says its prepared to offer daily Oakland-Shanghai service via Honolulu, with a one-way walkup coach fare of $355, about one-third of the going rate.

North American admits it has no hubs, no feed traffic, no alliance partners and no long-standing identity in the China market. But it claims it can offer something other airlines cant: A real choice about how to travel.

After deregulation began in the previous century, the government tried to promote competition by opening international routes to low-fare airlines, not always with happy results. People Express and World Airways had their day serving London, for example, but they and others have faded from view. The U.S. has no carrier in major intercontinental markets these days that offers what we might call the low-fare alternative.

We dont know whether it is sound public policy, as the lawyers might put it, for the U.S. to bestow these valuable operating rights on a small carrier like North American, but we believe the idea that the U.S.-China market is ripe for such a service is a provocative one.

The DOT should think it over.



IATA, yada

The die has been cast. IATA, the venerable trade and service organization of the worlds airlines, will absorb its U.S. subsidiary, Iatan, ending an internal debate first disclosed in Travel Weekly some nine months ago.

We said then and we say again: We may all be better off if IATA adopts a more transparent front end in its dealings with the U.S. travel industry, some of whose members may have forgotten that IATA is, first and foremost, an entity created by airlines, for airlines.

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