Visa restrictions, low mainland incomes will limit passenger numbers to the US Mainland carriers will struggle to reap the benefits of the United States-China air services agreement signed last week, with American visa restrictions and low mainland incomes limiting passenger numbers. However, the General Administration for Civil Aviation of China (CAAC) sees the deal as a milestone for the country's plan to liberalise its aviation regime. '[We did] not close the deal based on airlines' requests. It is the long-term benefit for the industry we are working for,' a CAAC senior international relations official said. According to the deal, the number of passenger and cargo flights will be expanded from 54 to 249 per week by 2010, while five new carriers from each country will be allowed to operate within six years. Carriers from both countries can fly to any city and will be allowed to set up cargo hubs and serve third-country destinations. However, strict visa requirements for mainlanders travelling to the US and the low number of Chinese who could afford overseas travel would make operations to the US an unattractive business for mainland carriers, the official said. The visa problem was noted in the memorandum of understanding accompanying the air services agreement, with the US Department of Transportation agreeing to take the issue to Congress. Morgan Stanley analyst Jim Lam said in a report that US carriers should benefit more from the agreement than the Chinese, at least in the near term. He also warned the expanded Sino-US freight capacity would hurt the cargo yield of mainland airlines. 'We estimate 2005 earnings per share of China Eastern Airlines and China Southern Airlines could fall 12 per cent and 4 per cent respectively, under the worst-case scenario of a 10 per cent decline in China-US cargo yield,' he said. China Eastern has no immediate plans to apply for new rights, with company secretary Luo Zhuping saying profitability would remain the airline's major concern. The Shanghai-based carrier has yet to fully utilise the rights it obtained in the previous agreement. It has retained its service to Los Angeles, but has suspended those to San Francisco, Chicago and Seattle. China Southern also said it had no plans to expand its US service and passenger operations from its hub in Guangzhou would face direct competition from well-established services in Hong Kong. However, it said it was looking to boost its freighter operations.