Lufthansa adds revenue sharing joint venture to Air China partnership

PUBLISHED : Tuesday, 08 July, 2014, 1:54am
UPDATED : Tuesday, 08 July, 2014, 1:54am

German airline Lufthansa is expanding its partnership with Air China, the mainland's biggest carrier, by setting up a revenue-sharing joint venture as it looks to gain better access to the world's second-largest aviation market after the US.

Lufthansa chief executive Carston Spohr said at the signing of a memorandum of understanding with Air China in Beijing yesterday - on the second day of German Chancellor Dr Angela Merkel's state visit to China - that the new joint venture would "offer our customers, particularly those in Europe and China, even better flight connections and services in the future".

The new partnership deal, which will allow the two carriers to sell tickets for each other's flights on certain routes, is scheduled to come into force as early as late October. But no details of the routes involved or the two companies' investment in the joint venture were revealed.

Air China president Song Zhiyong said the deal would help its ambition to become a global airline. The two carriers, both Star Alliance members, have a long history of cooperation dating back to 1989, when Ameco Beijing, a joint venture 60 per cent owned by Air China, was established. They have been code-sharing since 2000, which now covers all 81 weekly flights between China and Germany.

A joint venture, which involves sharing revenues or profits, allows airlines to have a higher degree of cooperation than code-sharing or direct coordination of routes, scheduling and prices without having to go for merger-like integration.

Lufthansa already has revenue-sharing joint ventures with United Airlines and Air Canada for flights between Europe and North America, and with ANA on routes between Europe and Japan. It said in the statement that strengthened partnership with Air China would allow it to "connect the world's four largest economies even better".

Both companies also signed a memorandum of understanding to expand collaboration in the area of maintenance, repair and overhaul services.