WASHINGTON, Oct 9 (Reuters) - The Trump administration on Thursday proposed banning Chinese airlines from flying over Russia on routes to and from the United States, saying the reduced flight time this practice enables puts American carriers at a disadvantage.
The proposal is another escalation of the
trade war between the world's two largest economies and was announced after Beijing on Thursday tightened controls for
rare earths exports crucial for some U.S. industries.
U.S. airlines have long criticized the decision to allow Chinese carriers to use Russian airspace on U.S. routes because it gives them the advantage of decreased flying time and burns less fuel, lowering costs.
Russia has barred U.S. airlines and many other
foreign carriers from flying over its airspace in retaliation for Washington banning Russian flights over the U.S. in March 2022 after the country
invaded Ukraine.
Chinese airlines were not banned and have been using this advantage to increase
market share compared to non-Chinese carriers on international routes.
The U.S. Transportation Department said on Thursday in its proposed order the current situation was "unfair and has resulted in substantial adverse competitive effects on U.S. air carriers."
The current proposal to apply the overflight restriction to U.S.-issued foreign air carrier permits does not apply to cargo-only flights, it added.
A spokesperson for China's foreign ministry on Friday said the restrictions were not conducive to person-to-person exchanges.
The Transportation Department's decision could affect some U.S. flights operated by Air China
(601111.SS), opens new tab, China Eastern
(600115.SS), opens new tab, Xiamen Airlines and China Southern
(600029.SS), opens new tab.
The order did not name Hong Kong-based airline Cathay Pacific
(0293.HK), opens new tab, which overflies Russia on its New York to Hong Kong route, according to flight tracking website Flightradar24. Cathay did not immediately respond to a request for comment.
China's aviation regulator, the Chinese embassy in Washington and Airlines for America, a major trade group representing carriers American Airlines
(AAL.O), opens new tab, Delta Air Lines
(DAL.N), opens new tab and United Airlines
(UAL.O), opens new tab that all fly to China, did not respond immediately to requests for comment.
Chinese mainland-listed shares in the country's three biggest airlines slipped on Friday, led by China Southern, which fell 1.3%. Air China
(601111.SS), opens new tab and China Eastern
(600115.SS), opens new tab slipped 1.26% and 0.95%, respectively.
The three state-owned carriers have struggled since the COVID-19 pandemic, posting five consecutive years of
annual losses.
TRADE TENSIONS
The proposal to ban Chinese airlines from using Russian airspace on U.S. routes comes amid growing tensions between Beijing and Washington over a series of economic issues.
Boeing
(BA.N), opens new tab is in talks to sell as many as 500 jets to China, which would represent a major breakthrough for the company in the world's second-largest aviation market, where orders have stalled amid U.S.-China trade tensions.
U.S. President
Donald Trump and his Chinese counterpart Xi Jinping are expected to hold a face-to-face meeting in South Korea at the end of October.
The Transportation Department is giving Chinese carriers two days to respond to its proposal and said a final order could be in effect as soon as November.
In May 2023,
the U.S. approved additional flights by Chinese carriers after they agreed not to fly over Russia on new routes, Reuters reported.
Last year, the Transportation Department said Chinese passenger airlines could boost
weekly round-trip U.S. flights to 50 but opted not to add more flights after
pressure from U.S. unions and airlines.
More than 150 weekly round-trip passenger flights were allowed by each side before restrictions were imposed in early 2020 due to the COVID-19 pandemic.
Some U.S. carriers have told the Trump administration that direct East Coast flights to China are not economically feasible if they do not fly over Russia. In some cases, carriers must leave some seats open and reduce cargo because of the increased flight length.
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