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US, Vietnam Agree to Renew Direct Flights - 2003-10-09

The U.S. and Vietnam have reached an agreement that will allow the first direct cargo and passenger flights between the two nations since the Vietnam War. But the two sides failed to reach a more far-reaching "open skies" accord.

U.S. officials hailed the agreement as a significant step toward bringing economic benefits to both the U.S. and Vietnam, and wider benefits to Asian travelers as a whole.

The five year pact was initialed Thursday in the Vietnamese capital of Hanoi. According to the agreement, two U.S. passenger airlines will be permitted to fly to Vietnam during the first two years of the plan - with a third airline to be added in the third year.

There are no restrictions on the number of cargo flights between the two nations, or on U.S. airlines operating in so-called code sharing agreements, which allow other airlines that already operate in each country to complete part of those flights.

Analysts say a target market for the new flights will be America's Vietnamese community. More than a million Vietnamese live in the U.S., many of whom fled Vietnam after the 1975 victory by the communists over the government of South Vietnam.

In a major concession by the U.S., it agreed not to compete with Vietnam in key Asian markets - by agreeing not to pick up passengers headed for Vietnam from the hub cities of Tokyo, Taipei, and Paris. Flight routings via Hong Kong would be restricted for the first two years of the plan.

The agreement must still be ratified by both nations' governments, and officials are not sure when it will go into affect. But officials say they expect to achieve full liberalization and an "open skies" agreement at the end of that five year pact.

Vietnam and the U.S. have enjoyed broader relations since a bilateral trade agreement went into effect in December 2001. Until now, the two nations were unable to reach an agreement on air travel.