A month after the last round of meetings between Hong Kong and the United States on an expanded air-services agreement failed to produce a new pact, negotiators on both sides of the Pacific say little progress has been made despite informal contacts between the two sides. Sources involved in the negotiations also said no agreement had been made on a schedule for further talks. The last set of meetings took place in Washington in the middle of last month, when three days of bilateral talks ended with both sides saying the gap had narrowed to the point where an agreement was possible from the next round of meetings. 'The sense from most of the parties involved is that we are close to a deal, but that one or two fundamental issues remain to be resolved,' a source said. 'It seems that the US government feels a bit constrained about what it can do when one of its major carriers is in some economic straits,' he said. The biggest obstacle continued to be opposition from financially troubled United Airlines - the second-largest US carrier - over American Airlines' proposed entry into the transpacific market through a code-sharing deal with Cathay Pacific Airways. American offers limited services from the US to Narita in Tokyo but its transpacific operations are believed to be unprofitable as it lacks an intra-Asian network. By comparison, United has a deep network of fifth-freedom routes within Asia and has a strong grip on Narita. As compensation, United has demanded to be given further intermediate fifth-freedom rights from Tokyo to Hong Kong. Under the present Hong Kong-US bilateral, United is allowed to fly a daily US-originating service to Chek Lap Kok via Narita. This would probably, by extension, also benefit Northwest Airlines which operates its own daily service from Narita. However, Hong Kong negotiators are unlikely to agree to United's request as Narita remained extremely congested despite the long-awaited opening of its second runway earlier this year. Increased traffic rights to Hong Kong for US carriers could only come out of SAR carriers' allotments, hindering the expansion hopes of the three local airlines, the source said. Hong Kong Dragon Airlines, for one, is believed to have long wanted access to Narita for passenger services, as does Cathay's wholly owned cargo subsidiary Air Hong Kong. He said it was believed Air Hong Kong had applied for landing rights to Narita earlier this year but was turned down. Still, there was optimism that a new pact could be concluded this year, possibly as early as the next round of discussions to take place in Hong Kong. 'We've managed to get through most of the difficult issues and are down to only one or two obstacles. So the signs are encouraging,' he said. However, the two sides still have to agree on a date for the next set of meetings. 'There's no schedule for further talks to place as of yet, due to prior commitments for both sides and the summer holiday period,' another airline official said. 'It's unlikely that there will be another round of talks in August, although the September, October period may be a possible target date for us to get together again,' he said. 'At any rate, it will be some weeks of work before we can schedule another set of official meetings to take place,' the official said, citing the large number of participants, particularly on the US side, involved in the talks.