Shanghai is set to become the latest battleground for the fierce rivalry between the British airlines Virgin Atlantic and British Airways, following an agreement to be signed today that will allow for the first time direct London-to-Shanghai flights.
It has emerged that the Beijing authorities are willing only to allow two flights per week to Shanghai from London, which means that only one carrier is likely to be awarded the much-coveted route.
British Prime Minister Tony Blair, who started a six-day state visit to Beijing, Shanghai and Hong Kong yesterday, will witness the signing of the air-services agreement in Shanghai, after which BA and Virgin will apply for the route from Britain's airline regulator, the Civil Aviation Authority.
Airline industry experts believe the CAA will choose only one British carrier for the route, as it will not be cost-effective to have the two flights operated by two airlines, and will consequently trigger a so-called scarce bilateral hearing.
Virgin has been flying to Hong Kong on a daily basis for the past four years, but it has no other direct flights into the mainland. BA operates 18 flights per week with direct flights to Beijing and to Hong Kong.
Virgin argues it should be given more routes to the mainland to even up the balance, and claims its presence in Hong Kong has generally helped to reduce air fares.
