China Eastern Airlines Corp. and Delta Air Lines Inc. will cooperate on code sharing and extend network coverage in each other’s home countries, the two airlines said in a statement Tuesday.

“This marks a full upgrade of strategic cooperation between two excellent airlines,” the companies said in the statement, issued before a joint news conference in Shanghai. The announcement builds on Delta’s plan, unveiled in July, to invest $450 million for a 3.6 percent stake in China Eastern.

By expanding in China, Delta is targeting a country that’s projected to overtake the U.S. as the world’s biggest air-passenger market within two decades. The broader partnership with China Eastern comes as an industrywide glut of seats damps U.S. carriers’ ability to raise prices domestically.

The two airlines will cooperate in code sharing, revenue management, scheduling, sales and frequent-flyer programs, among other areas, according to the statement.

Falling Yields

Delta currently serves Beijing, Shanghai and Hong Kong with daily non-stop flights from the U.S. China Eastern and its Shanghai Airlines unit operate code-share flights with Delta on 30 domestic routes in the U.S., 43 in China and seven across the Pacific, according to the July statement that announced Delta’s stake purchase.

China Eastern’s passenger yield, a measure of revenue per passenger for each kilometer flown, fell 7.9 percent from a year earlier in the six months ended June, the company said Aug. 14. The yield at Delta declined 3.9 percent in the second quarter after slipping 0.4 percent in the first.

Delta also owns minority stakes in Virgin Atlantic and Grupo Aeromexico SAB. In July, it agreed to increase its holding in Brazil’s Gol Linhas Aereas Inteligentes SA.

Shanghai Move

Delta in April deepened ties with China Eastern, also a member of the Skyteam airline alliance, moving its operations at Shanghai’s Pudong International Airport to share a terminal with the Chinese carrier.

China Eastern also is leveraging ties with carriers in other airline alliances. In August, the Australian Competition & Consumer Commission approved a plan by China Eastern and Qantas Airways Ltd., part of the oneworld alliance, to coordinate operations on flights between Australia and the mainland.

 

This article was written by Alexandra Ho and Clement Tan from Bloomberg and was legally licensed through the NewsCred publisher network.

Photo Credit: A China Eastern plane approaching Los Angeles International Airport. Aero Icarus / Flickr