Welcoming the move this week, Secretary for Transport & Housing, Eva Cheng explained that the pact will strengthen aviation links between Hong Kong and the Mainland, as more airlines can be designated to operate services.

"The new memorandum of understanding will also enhance the competitiveness of Hong Kong International Airport and strengthen the status of Hong Kong as an international and regional aviation hub," Ms Cheng revealed.

From April next year, there will be no restriction on the number of designated airlines on most routes. For the Beijing, Shanghai, Guangzhou, Shenzhen, Kunming, Dalian and Chengdu routes, each side can designate three airlines to operate passenger or all-cargo services, and two other airlines for all-cargo services from summer/autumn 2008.

From winter/spring 2008-09 the designations will rise to four airlines to operate passenger or all-cargo services, and three other airlines for all-cargo services.

The two sides also decided to further eliminate capacity restrictions. For passenger services, the frequency limit for 14 routes will be lifted from summer/autumn 2008, so airlines can operate on 49 routes without capacity restriction.

For the Beijing, Shanghai, Guangzhou, Shenzhen, Kunming, Dalian and Chengdu routes, the capacity will rise moderately.

For all-cargo services, the present capacity limit - which only applies to the Beijing and Shanghai routes - will be completely lifted from winter/spring 2008-09.