China Eastern, Japan Airlines seek to form joint venture

China Eastern Airlines and Japan Airlines (JAL) will apply to form a joint venture (JV) for international and domestic operations.

The cooperation, if approved by the airlines’ governments, will cover services between the two home countries, China Eastern said.

JAL added the carriers are also proposing to include domestic networks, reaching more than 50 cities in Japan and more than 80 in China. “Most,” not all, of the two companies’ domestic routes will be included in the deal, China Eastern said.

The airlines further intend to cooperate in relation to frequent flyers, ground service and expansion of sales channels, the Chinese partner added.

They want to begin the JV in the Japanese fiscal year that will start in April 2019, JAL said.

The two airlines have been codesharing since 2002, but a JV takes such an arrangement a step further: the partners do not merely sell tickets on each other’s services, but also share revenue or profits of the flights.

Because of the implied reduction in competition, government approval is routinely needed for joint ventures. The Japanese flag carrier already has a JV arrangement with Dallas/Fort Worth-based American Airlines and has applied for approval of one with Hawaiian Airlines.

Reflecting the strength of Chinese tourism to Japan, China Eastern’s operation between the two countries is larger than its partner’s. China Eastern runs 22% of all capacity between Japan and China, according to Chinese aviation analyst Lin Zhijie; Japan Airlines runs 9%.

For China Eastern, the agreement should bring greater access to Japan Airlines services to Beijing Capital International Airport. As a Shanghai-based company, China Eastern has only a limited operation at Beijing, the home of Air China…

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