The Department of Transportation on Wednesday moved to block Chinese airlines from flying into the United States, responding to China's silence on requests by Delta Air Lines (NYSE:DAL) and United Airlines Holdings (NASDAQ:UAL) to resume flights to China later this month.
Delta, United, and American Airlines Group (NASDAQ:AAL) all suspended service to China in the early days of the COVID-19 pandemic, but as the worst of the pandemic begins to fade the airlines are taking tentative steps to rebuild their international networks.
International flights are governed by treaties between the countries involved, and the U.S. and China do not have a so-called "open skies" agreement that allows for unlimited flights into the two countries. Four Chinese airlines, Air China, China Eastern Airlines, China Southern Airlines and Xiamen Airlines, continued to fly to the U.S. through the pandemic, and are currently flying about 34 flights per week.
"The Department will continue to engage our Chinese counterparts so both U.S. and Chinese carriers can fully exercise their bilateral rights," the DOT said in a statement. "In the meantime, we will allow Chinese carriers to operate the same number of scheduled passenger flights as the Chinese government allows ours."
The suspension would impact Chinese flights arriving and departing on June 16, though reports quoting government officials said that deadline could be moved up.
The dispute is part of broader tensions between the two countries over a number of trade and pandemic-related concerns. The ban for now will have a limited impact on U.S. airline revenues, as international traffic is expected to be weak for the next few quarters at least. But prior to the pandemic Asia was seen as a key region for growth by the airlines, so the dispute is worth monitoring by investors.