Hong Kong and the Mainland have signed a new air services arrangement to increase air routes and relax air passenger and cargo capacity constraints.

Under it, each side can designate three airlines to operate passenger and cargo flights and another airline to operate all-cargo flights on most routes from Winter 2007.

In addition to the existing 45 routes between Hong Kong and the Mainland, there will be 11 new ones, extending coverage to all major cities.

Between Winter 2006 and Summer 2007, the capacity limits for passenger services on 35 routes will be lifted in two phases. Capacity for the remaining routes will be substantially increased.

The cargo capacity limits for Beijing and Shanghai will be increased while the limits for all other routes will be completely removed by Summer 2007.