After a decision by Chinese authorities to impair the operating rights of United Airlines flights to Shanghai, the US Department of Transport (DOT) has placed temporary capacity limits on Chinese airlines flying into certain US airports.

DOT order limits passenger loads on four Chinese airlines

According to an August 18 DOT order, the four Chinese airlines currently providing scheduled China-US passenger services will have their passenger capacity capped at 40% on defined routes for a set period of time.

The four Chinese airlines are Air China, China Eastern, China Southern, and Xiamen Airlines. Specifically, the DOT order initially restricts capacity on Air China's Boeing 777-300ER CA987 Beijing (PEK) - Los Angeles (LAX) flights between August 23 - 29.

Next in line is China Eastern's Boeing 777-300ER MU587 Shanghai (PVG) - New York (JFK) flights between August 30 - September 5. Then follows China Southern's Airbus A380-800 CZ327 Guangzhou (CAN) - Los Angeles (LAX) services, with flights capacity restricted between September 6 -12.

Finally, Xiamen Airlines' Boeing 787-9 MF829 Xiamen (XMN) - Los Angeles (LAX) services will be impacted between September 13 - 19. The US DOT says its decision isn't about perpetuating the situation. Rather, the DOT wants an operating environment where both Chinese and US airlines can fully exercise their bilateral rights.

"Only then will the Department's actions to maintain a competitive balance and fair and equal opportunity among US and Chinese air carriers in the scheduled passenger service marketplace no longer be necessary," the DOT order reads.

The latest salvo in a long-running dispute

Wednesday's order from Washington is the latest salvo in a long-running dispute between the US and China. Airlines from both countries are pawns in the dispute. After China put into place restrictions contrary to the US-China Civil Air Transport Agreement in March 2020 that limited US airlines' operations in China, the US retaliated by suspending all scheduled flights by Chinese airlines.

By mid-2020, there was a thaw, and airlines from both countries resumed operating a limited number of flights. Since then, in addition to the Chinese airlines, United Airlines, Delta Air Lines, and American Airlines have offered scheduled flights between the US and China.

But on August 6, Chinese authorities told United Airlines five passengers on a UA flight from San Francisco to Shanghai had tested positive for COVID-19. China issued a notice to United with circuit breaker terms.

Those terms gave United Airlines three options. The airline could cancel two SFO - PVG services, operate two flights without passengers, or operate four flights capped at a 40% passenger load. United selected option three and China applied the rule to four consecutive Wednesday departures beginning on August 11.

The DOT says China's actions run counter to the bilateral air services agreement

The Dot cried foul. They say United and other airlines follow pre-departure and inflight protocols set down by both governments. It is therefore unfair to hold an airline responsible if passengers later test positive for COVID-19.

"The Chinese Government individually clears each and every potential traveler to China prior to their departure from the United States after verifying pre-departure testing results and other required documentation," the DOT order says.

According to the DOT, China's actions are adverse to the public interest and warrant "proportional remedial action." Under the existing US-China Civil Air Transport Agreement, both countries agree on the capacity allowed to operate. The unilateral decision-making from Beijing about changes to capacity runs counter to the agreement.

The DOT says should China reverse its decision regarding United SFO - PVG flights, they'll revisit Wednesday's order.