Viet Nam and the United States initialed an air services agreement that would allow direct passenger and cargo flights Thursday, tapping a surge in trade and travel between the former war foes.

Neither side provided a time frame for ratifying the agreement, but it was expected this could take place within a few months. Several US carriers said they thought the first direct flights from the United States might begin next March.

Viet Nam Airlines said it was unsure when its jets would land in the United States. Prior to the pact, it had planned to do so in 2006. Now, "we hope we can cut short the time," said Pham Ngoc Minh, executive vice-president in charge of commercial affairs.

The unlisted airline said two-way passenger traffic is between 270,000 and 280,000 people a year, and has been growing at between 5 and 7 per cent a year. The pact should double that growth rate in the next few years, Minh said.

"This is a good stepping stone and will help integrate our economies much better," said Laura Faux-Gable, deputy director of the US State Department's Office of Aviation Negotiations, who led the US delegation. Nine US carriers were represented.

Hanoi expressed delight at the decision. "It paves the way for further economic and cultural exchange" between the two countries, Pham Vu Hien, deputy head of the Civil Aviation Administration of Viet Nam, told a news briefing after the pact was initialed.

A bilateral trade pact that went into effect in December 2001 resulted in a 128 per cent surge in exports from Viet Nam to the United States in 2002. US exports to Viet Nam grew 26 per cent last year.

In the first nine months of 2003, 159,080 Americans visited Viet Nam. US citizens comprise the second biggest group of visitors to Viet Nam after China.

US carriers serving now fly to a third country, such as Japan, and put their passengers on connecting flights operated by partner airlines.

US cargo operators have been leasing space from carriers with direct links to Viet Nam, which has the fastest growing economy in Southeast Asia.

First talks on an aviation link began in 1998, three years after the countries normalized relations following the 1975 end of the Viet Nam War.

The five-year pact, which will be renegotiated at the fourth year, allows two passenger carriers on each side to operate directly for the first two years, with another permitted in the third year. The five years start after the pact is signed.

If more than two US airlines want to start direct flights, the US Department of Transportation will choose among the applications.

Washington had to give certain unusual concessions, including agreeing that its planes would not pick up passengers when stopping in third countries en route to Viet Nam. Viet Nam Airlines fears permitting this would hurt its competitiveness.

(Xinhua News Agency October 10, 2003)