HONG KONG'S Dragon Airlines (Dragonair) is hoping to increase services to Japan following the recent agreement on air services between the territory and Tokyo. An airline spokesman said it was hoped services could be increased on flights to Hiroshima and Sendai, and the new agreement was to be studied to see what was allowed. Dragonair operates four flights a week to both points. 'You can either look at increasing capacity on current routes or look at new points,' the spokesman said. 'Dragonair is looking to increase capacity. The airline is constantly evaluating market needs and looking at new destinations. 'But this is subject to approval from the relevant authorities.' The territory's two other airlines, Cathay Pacific Airways and cargo carrier Air Hong Kong also operate flights to Japan, a high-yield destination for all three. A Cathay spokesman said the airline was also looking at increasing capacity, but the new agreement would be studied before any decision was made. The new air services agreement was reached between the Economic Services Branch and Japan's Ministry of Transport late last month following three days of negotiations in Tokyo. It is likely to be initialled by the end of the year. The agreement, which must be approved by the Sino-British Joint Liaison Group before taking effect, is to replace the previous one negotiated by Britain on the territory's behalf. That previous agreement would not have applied after the Chinese takeover in 1997. Similar talks with the Philippines, held in mid-October, failed to culminate in a new agreement but the Government's chief air services negotiator Andrew Pyne said that 'substantial progress' had been made. The next meetings with Manila are due in January and an agreement could be reached then, as time is running out for the territory to sign new accords. So far, 19 agreements have now been secured. The agreement with the Philippines is the only one remaining to be drawn up before the 1997 takeover. An agreement drawn up with Australia also was due to be 're-evaluated' by the end of this year and a new, confidential memorandum of understanding (CMU) written, following a dispute over capacity between Cathay and Qantas Airways. Bilateral agreements are a prerequisite for services between countries and territories, They normally specify routes to be operated, airlines designated to fly them, the capacity each side may provide and the tariffs to be charged. The agreements often come with CMUs, which are more restrictive than the published air services agreements, details of which are kept secret.