VZCZCXRO4843
OO RUEHGH
DE RUEHC #6667/01 0782100
ZNR UUUUU ZZH
O P 192042Z MAR 09
FM SECSTATE WASHDC
TO RUEHBJ/AMEMBASSY BEIJING IMMEDIATE 6619
INFO RUEHGZ/AMCONSUL GUANGZHOU PRIORITY 0337
RUEHGH/AMCONSUL SHANGHAI PRIORITY 3758

UNCLAS SECTION 01 OF 02 STATE 026667 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAIR CH KTIA
SUBJECT: FEDEX LETTER FOR CAAC 
 
REF: A. STATE 24279 
     ¶B. MARCH 2009 KACHUR--LIMAYE-DAVIS EMAILS 
 
¶1. (SBU) Action Request: Washington agencies request the 
Embassy deliver the following letter to Vice Minister Yang 
Guoqing, when Embassy meets with the General Administration 
of Civil Aviation, or earlier if that appointment is delayed 
beyond Monday.  A signed and scanned copy of the letter will 
be emailed to the civil aviation officer in Beijing.  Text of 
letter follows: 
 
The Honorable Yang Guoqing 
Vice Minister 
General Administration of Civil Aviation of China 
155 Dongsi Street West 
Beijing, China 100710. 
 
Dear Mr. Vice Minister: 
 
We appreciate very much the partnership that the General 
Administration of Civil Aviation of China (CAAC) and the 
United States Government have developed over many years. 
During this time, our close partnership has produced a number 
of expanded air services agreements and spawned an Aviation 
Cooperation Program.  Drawing on this spirit of continued 
cooperation, we are writing to you concerning certain 
operations of the FedEx Corporation (FedEx). 
 
According to U.S. Embassy Beijing and FedEx, CAAC has 
expressed concern regarding the Shanghai-Guangzhou segment of 
FedEx's planned 
Osaka-Shanghai-Guangzhou-Almaty-Frankfurt-Par is-Memphis 
flights as proposed in its Summer 2009 schedule.  This route 
is an adjustment of FedEx's previously approved 
Nagoya-Shanghai-Frankfurt-Almaty-Paris-Memphi s route to 
reflect the February 6, 2009 opening of the FedEx hub at 
Guangzhou.  Specifically, we understand that CAAC pointed to 
a unilateral "Operating Approval" it issued in January in 
objecting to this flight routing. 
 
The United States Government has carefully reviewed FedEx's 
proposed schedule and we believe it is fully consistent with 
the terms of the United States-China Civil Air Transport 
Agreement, as amended ("the Agreement"). 
 
Under Annex I, Section I.B. of the Agreement, airlines 
designated by the United States are entitled to operate 
all-cargo services with full traffic rights from any points 
in the United States, via any intermediate points, to any 
points in China and beyond to any points outside of China. 
The Agreement specifically contemplated the type of 
operations from a hub for which FedEx has applied in its 
Summer 2009 Schedule, and provides that a cargo hub operator, 
which FedEx has been since opening its Guangzhou hub on 
February 6, 2009, shall be allowed "to determine the 
frequency and capacity of the international air services it 
offers at the hub based upon commercial considerations in the 
marketplace." (Paragraph 2(a) of Article 11bis.) 
 
Specifically, the Agreement  states that "...Consistent with 
this right, neither Party shall unilaterally limit the volume 
of traffic, frequency or regularity of service, or the 
aircraft type or types operated by the airline at the hub, 
except as may be required for customs, technical, 
operational, or environmental reasons under uniform 
conditions consistent with Article 15 of the Convention." 
Given that the addition of the Guangzhou segment would not 
add any new departures, arrivals, operations, or capacity at 
Shanghai Pudong airport, we see no justification for 
unilateral limits on reciprocal rights clearly established 
under the Agreement.  While flights to Shanghai would not be 
added under FedEx,s proposed schedule, Guangzhou,s airport 
would benefit from new landings and takeoffs and the 
associated increase in landing fees and revenue. 
 
We believe the "Operating Approval" as applied by the CAAC 
unilaterally imposes conditions that are inconsistent with 
the Agreement. 
 
On this basis, we urge CAAC to approve FedEx's Summer 2009 
Schedule so that FedEx can commence operating under that 
schedule on March 28.  CAAC's prompt approval of the summer 
schedule -- even if on a temporary basis to allow time for 
our two governments to resolve issues -- will provide 
essential certainty to FedEx and to the shipping public, 
which along with the associated benefits of continued cargo 
 
STATE 00026667  002 OF 002 
 
 
capacity and operational flexibility, is in the interests of 
both of our economies. 
 
The Departments of State and Transportation have long enjoyed 
excellent working relations with CAAC.  We are confident that 
our good relationship and ongoing cooperation will allow us 
to resolve this issue.  If that cannot be done by 
correspondence, we would look to schedule a visit to Beijing 
for our technical team in the very near future. 
 
Thank you for your consideration. 
 
Sincerely, 
David D. Nelson 
Acting Assistant Secretary 
Bureau of Economic, Energy and Business Affairs 
U.S. Department of State 
 
Susan McDermott 
Acting Assistant Secretary for Aviation and International 
Affairs 
U.S. Department of Transportation. 
 
¶2. Washington agencies appreciate Post's ongoing assistance. 
CLINTON