The U.S. Department of Transportation has approved United Parcel Service’s request to transfer six of its Hong Kong flying rights from two countries so it can inaugurate service to Clark Airport in the Philippines, where an expansion project for the carrier’s hub is expected to be completed later this year.
UPS (NYSE: UPS) has also expressed interest in poaching recent authority granted to Asia Pacific Airlines to operate a Guam-Hong Kong-Manila service if the route remains dormant.
UPS has authority to operate 19 “fifth-freedom” all-cargo frequencies per week under the U.S.-Hong Kong air services agreement. Friday’s decision allows the airline to immediately transfer all four of its service rights to Warsaw, Poland, and two of three rights to Hanoi, Vietnam, to Clark Airport, according to regulatory filings.
Fifth-freedom rights allow an airline to operate commercial flights between two foreign countries, as long as the flight starts or ends in the airline’s home country. FedEx controls 14 of the 64 allocations.
The bilateral memorandum of understanding permits U.S. all-cargo carriers to operate up to 12 weekly frequencies between Hong Kong and Clark, a former U.S. Air Force base. Currently only three of those frequencies are allocated, all to FedEx.
UPS said it plans to operate the new route using Boeing 767-300 freighter aircraft.
“UPS continually evaluates its global air network to support customer demand and evolving trade flows,” said spokeswoman Michelle Polk.
The Clark Airport expansion strengthens the freight transportation company’s Asia-Pacific network. UPS has not disclosed how much it invested in the project. UPS recently broke ground on a major expansion project for its Hong Kong hub and is upgrading its terminal at Incheon airport in Seoul, South Korea.
The DOT in April approved Asia Pacific Airlines’ request to operate scheduled service seven times per week on the new route, under the U.S.-Philippines Air Transport Agreement, using a Boeing 757 converted freighter. The airline, legally listed as Aero Micronesia, was supposed to begin service within 90 days, but received an extension until Oct. 31. UPS said it strongly objects to any further requests for relief and will move to have the department withdraw the frequencies from Asia Pacific Airlines and make them available for reallocation to other carriers if it doesn’t commence service by the current deadline.
(Why It Matters: The regulatory maneuvering provides a window into where UPS sees the market growing.)
FedEx regional moves
Meanwhile, rival FedEx (NYSE: FDX) is also enhancing its intra-Asia network with new freighter services that promise faster delivery times for regional shippers. Earlier this month, FedEx announced it has begun operating a Boeing 777 cargo jet five times per week from its Asia-Pacific hub in Guangzhou, China, to Sydney, Australia, boosting inbound trade capacity. The new routing is expected to shave one day of transit time for select shipments from the Philippines, Thailand, Malaysia, Japan and South Korea to Australia, with delivery possible in as little as two business days.
The move follows the November addition of direct freighter service between Guangzhou and Penang, Malaysia, and more flights from Bangkok, Thailand, to Guangzhou.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
Write to Eric Kulisch at ekulisch@freightwaves.com.
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