Air Canada, Air China sign joint venture deal in state airline’s first deal with North American carrier

Air Canada, Air China sign joint venture deal in state airline’s first deal with North American carrier

BEIJING/SHANGHAI — Air China Ltd and Air Canada signed a joint venture agreement on Wednesday to increase the commercial cooperation on flights between the two countries, both airlines said.

The joint venture marks the Chinese state airline’s first deal with a North American carrier. Both carriers had earlier agreed to codeshare services and allow passengers to use each other’s lounges, but a complete joint venture is expected to help expand their collaboration.

The companies did not reveal financial terms for the deal, but said the process is expected to be wrapped up in six months.

Canada’s biggest airline has said the joint venture would help it compete more “aggressively” in the Pacific market, especially at a time when it is facing yield pressures on flights to China and Hong Kong.

The joint venture “is an important strategy in our global expansion as it significantly increases Air Canada’s presence in an aviation market set to become the world’s largest by 2022,” Air Canada Chief Executive Officer Calin Rovinescu said.

The Sino-Canada market is one of the most significant long-haul markets for the carrier, and we hope to roll out more products and services under the partnership, Air China Chairman Cai Jianjiang said.

China’s flag carrier had signed a joint venture agreement in Europe with Germany’s Lufthansa in 2016. Under the deal, where no cash investment was involved, the two firms were allowed to sell each other’s tickets on certain routes. The deal also included Lufthansa’s units Austrian Airlines and Swiss Air.

Air China’s domestic rivals have been forging alliances with their North American peers.

China Eastern Airlines Corp Ltd had agreed to sell a 3.55 per cent stake to Delta Air Lines Inc in 2015, while China Southern Airlines Co Ltd sold a small stake to American Airlines Group Inc for US$200 million last year.

The joint venture comes soon after Taiwan’s foreign ministry asked the Montreal-based company for a “speedy correction” following the airline’s decision to list Taipei, the capital of Taiwan, as a part of China on its booking website.

© Thomson Reuters 2018

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