July 12, 2007 8:30 AM, EDT

U.S., China Sign Air Pact

Move Allows Unlimited Cargo Flights Between Countries
Larry Smith/Trans Pixs

The United States and China have signed an aviation agreement that will significantly increase passenger and cargo flights between the two countries, the Department of Transportation said.

The pact, signed by DOT Secretary Mary Peters and Chinese Minister of Civil Aviation Yang Yuanyuan will more than double commercial passenger departures by 2012 and allow unlimited cargo flights between the two countries, DOT said.

The added airfreight capacity “should benefit freight forwarders, and to a lesser extent express carriers with notable exposure across China as capacity and potential air options gradually expand,” transportation analyst Ed Wolfe of Bear Stearns wrote in a note to investors Thursday.

The agreement will generate as much as $5 billion in passenger and cargo revenue for the airline industry over the next six years, and as much as $8 billion in new economic activity in the United States, Peters said.