Officials from the U.S. and China have reached agreement on an open skies pact that will allow U.S. cargo carriers to establish hubs in China and increase their number of weekly flights to that country. Under terms of the deal, each country can appoint five additional airlines to service the U.S.-China market.

The U.S. already has 4 cargo carriers in that trade lane, including United Parcel Service and FedEx. Both carriers will be allowed to add some 21 flights this year, another 18 in 2005, and 72 more by 2010.

Currently, among U.S. flag carriers, only United and Northwest have passenger rights, although analysts believe that American Airlines is eagerly eyeing a Chicago-Shanghai route.

At the same time, Air China, China Southern Airlines and China Eastern Airlines are expected to continue to build their service base utilizing rights already granted to fly into the U.S.