China, US air­lines deepen part­ner­ship

Deal be­tween China Eastern and Delta set to boost their busi­ness po­ten­tial in Sino-US mar­ket

China Daily (Canada) - - SHANGHAI - By WANG YING in Shang­hai

wang_y­ing@chi­nadaily.com.cn

China Eastern Air­lines Corp Ltd on Septem­ber 1 ex­panded their co­op­er­a­tion with Amer­i­can com­pany Delta Air Lines by ink­ing strate­gic share pur­chas­ing and busi­ness agree­ments.

Ac­cord­ing to the agree­ments, the two car­ri­ers will work on de­vel­op­ing long-term busi­ness plans with re­gard to mat­ters such as code shar­ing, cabin man­age­ment, sched­ule co­or­di­na­tion, sales col­lab­o­ra­tion and shar­ing of air­port fa­cil­i­ties.

“China Eastern and Delta Air used to be friends, but now we are fam­ily,” said Liu Shaoy­ong, chair­man of China Eastern. “China Eastern has longed for a for­eign in­vestor over the years, and our at­ti­tude is al­ways open.”

This new de­vel­op­ment comes af­ter the an­nounce­ment on July 27 that Delta had signed an agree­ment to ac­quire 10 per­cent of China Eastern Air­lines’ H shares, or an over­all 3.55 per­cent stake, for $450 mil­lion.

The strate­gic part­ner­ship also marks a break­through for the Shang­hai-based car­rier, which has for years been try­ing to es­tab­lish a strate­gic part­ner­ship with an in­ter­na­tional coun­ter­part.

In 2008, China Eastern of­fered to sell a 24 per­cent stake to Sin­ga­pore Air­lines and Te­masek Hold­ings but the plan failed to ma­te­ri­al­ize. Ear­lier this year on Au­gust 21, Qan­tas and China Eastern got the green light from the Aus­tralian Com­pe­ti­tion and Con­sumer Com­mis­sion (ACCC) to work to­gether. The ACCC’s de­ci­sion will see Qan­tas and China Eastern in­crease their ca­pac­ity on routes be­tween Aus­tralia and Shang­hai by 21 per­cent over the next five years.

An­a­lysts said that the co­op­er­a­tion be­tween China Eastern and Delta will bring the two par­ties broader mar­ket po­ten­tial for the fast grow­ing Si­noUS tourism mar­ket. China’s in­ter­na­tional routes have seen a 20 to 30 per­cent in­crease in pas­sen­ger num­bers since 2013, and this growth, along with fac­tors such as the new 10-year visa pol­icy for Chi­nese peo­ple vis­it­ing the US and the Asian coun­try’s ris­ing eco­nomic sig­nif­i­cance, have caught the at­ten­tion of ma­jor air­lines.

“Although there is no way to im­me­di­ately mea­sure the co­op­er­a­tion, it is ob­vi­ous that the two car­ri­ers will be able to strengthen their net­work be­tween China and the US with each other’s home mar­ket des­ti­na­tions,” said Yu Nan, an in­dus­trial an­a­lyst at Haitong Se­cu­ri­ties.

Head­quar­tered in Shang­hai, China Eastern owns a fleet com­pris­ing 550 air­crafts and it serves 90 mil­lion pas­sen­gers ev­ery year. It op­er­ates more than 35 flights to the US from Shang­hai on a weekly ba­sis. Delta owns more than 700 air­crafts, serves more than 170 mil­lion pas­sen­gers per year and has 28 flights to Shang­hai ev­ery week.

PRO­VIDED TO CHINA DAILY

China Eastern Air­lines Corp Ltd reaches agree­ment with Delta Air Lines to ex­pand their co­op­er­a­tion.

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