Lufthansa and Air China signed a cooperation agreement that will enable the Star Alliance members to take on competition from rival Skyteam partnership on China-Europe routes and boost earnings.

The flag carriers of Germany and China plan to increase coordination on flight schedules and expand code-sharing on China-Europe flights when a venture takes off next year, Air China chairman Cai Jianjiang said.

The venture, pending regulatory approval in Europe and China, is the closest the two carriers can get under restrictions on foreign control of Chinese airlines.

The agreement follows two years of negotiations and is aimed at giving Lufthansa and Air China a better grip on China-Europe routes to expand their market leads on these destinations. 

Air China is the No. 1 carrier on China-Europe routes with a 22% market share, followed by Lufthansa‘s 17%, according to Rao. 

Air France-KLM Group has joint ventures with rival Skyteam alliance partners China Southern Airlines -- the biggest Asian airline by passengers -- and China Eastern Airlines that involve timetable harmonization and cost- and revenue-sharing on some routes.

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