By Sarah Sloat
FRANKFURT--Deutsche Lufthansa AG and Air China Ltd. on Tuesday said they finalized a joint venture aimed at boosting profitability on routes between China and Europe and improving access to each others' markets.
The joint venture, based on a 2014 memorandum of understanding, lets the two carriers expand code-sharing and coordinate schedules and pricing, starting with the 2017 summer schedule. The agreement also applies to Lufthansa subsidiaries Austria Airlines and Swiss International Air Lines.
European carriers in recent years have sought out stronger ties to growth markets like China to compensate for sluggish domestic business and to prevent customers from switching to Gulf State competitors. To do so they often turn to joint ventures, which allow airlines to improve profitability and market access while sidestepping operative restrictions and barriers to consolidation, such as the limits some countries put on foreign investment in their airlines.
In Asia, Lufthansa already has a joint venture with Japan's All Nippon Airlines and another with Singapore Airlines, which was signed last November. Lufthansa said about half of its long-haul flights are now covered by joint ventures.
"The Chinese aviation market is one of the most important growth markets worldwide," said Lufthansa Chief Executive Carsten Spohr, adding that the Air China agreement would let the German airline further pursue "its partnership-based Asia strategy."
Lufthansa and Air China first signed a code-sharing agreement in 2000, and also have an aircraft maintenance joint venture called Ameco Beijing.
"The joint venture ... is another major step of Air China's globalization strategy following Air China's accession into Star Alliance in December 2007," said Cai Jianjiang, Air China's chairman.
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