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 to Clark Airport in the Philippines, where an expansion project for the carrier’s hub is expected to be completed later this year, according to FreightWaves.
Fifth-freedom rights and the Hong Kong-Clark lane
UPS (NYSE: UPS) holds authority to operate 19 fifth-freedom all-cargo frequencies per week under the U.S.-Hong Kong air services agreement. 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, FreightWaves explained.
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 cited by FreightWaves. UPS plans to operate the new route using Boeing 767-300 freighter aircraft.
| Carrier | Hong Kong-Clark weekly frequencies | Total U.S.-Hong Kong allocations |
|---|---|---|
| FedEx | 3 (all currently allocated) | 14 of 64 |
| UPS | Gains 6 via transfer (4 Warsaw + 2 Hanoi) | 19 |
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, FreightWaves reported. Currently only three of those frequencies are allocated, all to FedEx.
"UPS continually evaluates its global air network to support customer demand and evolving trade flows," FreightWaves quoted spokeswoman Michelle Polk as saying.
UPS network expansion across Asia-Pacific
The Clark Airport expansion strengthens the freight transportation company’s Asia-Pacific network. UPS has not disclosed how much it invested in the project. Separately, 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, FreightWaves reported.
Asia Pacific Airlines route authority at stake
- The DOT in April approved Asia Pacific Airlines’ request to operate scheduled service seven times per week on a Guam-Hong Kong-Manila route, under the U.S.-Philippines Air Transport Agreement, according to FreightWaves.
- The airline, legally listed as Aero Micronesia, planned to use a Boeing 757 converted freighter.
- It was supposed to begin service within 90 days but received an extension until Oct. 31.
- UPS has expressed interest in taking over the authority if the route remains dormant.
- 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 does not commence service by the current deadline.
FedEx adds intra-Asia freighter services
FreightWaves reported that rival FedEx (NYSE: FDX) is enhancing its intra-Asia network with new freighter services:
- Earlier this month, FedEx began 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.
Operational impact for shippers
For freight forwarders and shippers, the DOT decision gives UPS six additional weekly frequencies on the Hong Kong-Clark lane, where FedEx currently holds all three allocated frequencies. The Clark hub expansion, expected to be completed later this year, will strengthen UPS’s Asia-Pacific network. On the FedEx side, the new Guangzhou-Sydney Boeing 777 service can deliver select shipments from Southeast and Northeast Asia to Australia in as little as two business days, according to FreightWaves.
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