Australia, China to allow more flights between them in landmark air agreement

PERTH (Reuters) - Australia and China are allowing more flights with each other, and paving the way for new routes, in an air services pact that follows a historic free trade agreement they struck last year.

China is Australia's top trading partner and its most valuable tourism market, with almost 800,000 tourists spending some A$5 billion (S$5.3 billion) in the last financial year.

The new pact, which Australia announced on Friday, lets both countries' carriers immediately add 4,000 seats a week to current caps between Australia's major gateway cities and the Chinese cities of Beijing, Shanghai and Guangzhou.

An additional 7,000 seats will be phased in weekly over the next two years. "Last year, 100 million Chinese travelled abroad, and this is set to double to some 200 million by 2020," said Australia's Trade and Investment Minister Andrew Robb. "Tripling aviation capacity from China into Australia over the next two years will ensure we are well placed to capture this growth," he said in a statement.

The free trade pact signed last November had been more than a decade in the making, and boosted ties significantly.

The air services deal also allows for the expansion of traffic rights to airlines to fly beyond the two countries by October 2016, paving the way for new routes.

The pact recognises the sharp growth of emerging markets in China, allowing airlines from both countries the same increase in capacity between gateway cities besides Beijing, Shanghai and Guangzhou.

Existing unlimited passenger services between China and Australian locations such as Cairns, the Gold Coast, Adelaide and Darwin will continue.

The agreement cuts regulations Australian airlines face in China, by dropping a requirement for government approval of airfares.