Long-running negotiations between Hong Kong and the Philippines over air rights have finally been concluded with an agreement which guarantees air services between the two places after next year. The agreement was reached yesterday after at least 10 rounds of talks over an eight-year period aimed at finding an agreement to replace a British-negotiated deal. The previous deal, which had been in place since 1955, is due to expire on June 30 next year. The agreement with the Philippines was the last Hong Kong needed to finalise before it is handed over to China. The sealing of the deal followed two days of talks to settle the ongoing stand-off, after the latest six-month wrangle between the territory and Manila. One major beneficiary of the settlement will be the Hong Kong flag-carrier, Cathay Pacific Airways. A spokesman for Cathay said the company was 'very pleased' the deal had been finalised. 'It guarantees air services between Hong Kong and the Philippines continue after 1997,' he said. The sticking-point in the negotiations was demands by Philippine Airlines (PAL) for rights to fly on from Hong Kong to European destinations, primarily London or Frankfurt. These are known as 'fifth freedom' rights. It is also believed PAL had been demanding capacity be cut on the busy route between Hong Kong and Manila in a bid to reclaim part of its dwindling market share. Sources said it was essential for the deal to be reached soon because of the need for China to approve it before it took effect. Industry insiders have predicted that it could take Beijing as long as a year to give its blessing to a Philippines-Hong Kong air accord. It appears deadlock over fifth freedom rights ended with the Philippines settling for the same rights it already has. 'My understanding is there has been no change in the fifth freedom rights,' the Cathay spokesman said. But the new agreement did allow for an increase in seat capacity to meet growing traffic demands, he said. It is understood the move to increase seat demand between the two centres is a response to growing passenger demand. The conclusion of the agreement follows suggestions Governor Chris Patten and Philippine President Fidel Ramos may be forced to meet to resolve the dispute themselves. Talks between Philippines and Hong Kong authorities were held three times this year - in February, August and this week - before yesterday's successful conclusion.