The carrier is spending 688 million yuan (HK$647 million) to upgrade business and first-class cabins on 15 Boeing 747s, Airbus A340s and other aircraft serving international destinations, said Rao Xinyu, head of investor relations, Monday. New York is the first destination in line for Air China's upgraded service.

``The competition on some of our most important routes to the United States and Europe has become rather fierce, and our standards are too far behind,'' Rao said.

The airline will boost the number of flights on its Beijing-New York route to seven a week starting July 1, from four a week now.

Frequency on other ``important routes'' to Europe and the United States will also rise.

Houston-based Continental Airlines will start flying direct between Beijing and New York this month as it seeks to boost profits by tapping increased demand for travel between the US and China. The US was China's biggest export market last year.

China's passenger traffic will expand by 8.2 percent annually until 2023, compared with a global average of 5.3 percent, said Airbus, the world's biggest maker of commercial aircraft, in March. The 2008 Beijing Olympics and 2010 Shanghai World Expo will also help generate more business.

Air China's new business-class seat can convert into a 170-degree bed, allowing passengers to lie almost flat. The first-class seat will have a 180-degree angle. BLOOMBERG