UPS favored as China carrier

The Transportation Department said it hasn't reached a final decision on which carrier will be granted the coveted rights to provide new air service to the vast and growing China market.

However, airline and cargo industry officials are widely predicting that the federal agency will designate UPS as the single new U.S. carrier to serve China under a bilateral agreement. For UPS, a victory would sharply elevate its strategic position in Asia.

The decision, expected any day, will culminate a protracted horse race among UPS, Delta Air Lines, Fort Worth-based American Airlines and Polar Air Cargo, a 6-year-old freight carrier, for the rights to be the one new U.S. carrier serving China.

Kevin Montgomery, Polar's vice president of planning and government affairs, said UPS's huge size and political muscle give it an edge over other carriers.

Moreover, he said, demand for cargo service in China is outstripping demand for more passenger flights.

Spokesmen for Delta and American declined to comment. However, several industry officials who didn't want to be identified said they believe the rights will go to UPS. Some said they had been told that their own company was out of the running.

A UPS spokesman responded, "I don't think anybody knows," dismissing other comments as speculation.

The China route case comes at a historic time in U.S.-China relations. The Senate passed a measure by a wide measure Tuesday that gives China permanent normal trade status and opens the way for Beijing to join the World Trade Organization. China's entry into that elite capitalist group is expected to spawn a broad expansion in trade with the United States.

Ten weekly round-trip flights are up for grabs in the competition. Most industry officials predict the Transportation Department will split those slots between UPS and one of the U.S. carriers already serving China – FedEx Corp., Northwest Airlines and United Airlines.

Spokesmen for FedEx, Northwest and United declined to comment on the likely outcome.