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China's Air China and US-based United Airlines announced Thursday they had reached a marketing alliance, including co-operation on code-sharing flights, frequent flyer programmes and shared airport lounges.

A Boeing747 airliner of Air China

A Boeing737 airliner of United Airlines

The new co-operation will take effect on October 31, when United's 14 weekly flights including daily Beijing-Chicago and Shanghai-San Francisco service will carry both United's and Air China's codes.

Code-sharing is a commercial agreement between two airlines that allows an airline to put its two-letter identification code on the flights of another airline as they appear in computerized reservation systems.

At the same time, Air China's 12 weekly flights, for Beijing and Los Angeles, three Beijing and New York and five Beijing San-Francisco, will be operating under the codes from both airlines.

In total, the two airlines will offer 26 non-stop code-sharing flights a week between China and US.

"Our new marketing alliance with Air China will provide travellers between the two countries with more travel options and benefits,'' said Glenn F. Tilton, president of United.

He repeatedly used the term "tremendous'' to describe the market potential for China's civil aviation sector.

"China's aviation market is growing rapidly, and Air China's extensive network covers all major business and travel hubs in China,'' he said. "The new relationship will help expand United's worldwide network and access to China.

Air China finished code-sharing co-operation with US-based Northwest Airlines last year, and has been in talks with United Airlines since.

"What I can say is Air China makes a very good choice. Selecting a good partner is very important, and we are very delighted about our co-operation,'' Tilton said.

Under the agreement with Air China, United will extend its service from Beijing and Shanghai to five other cities via code-sharing flights operated by Air China carrying United's codes. The five cities are Guangzhou, Shenyang, Xi'an, Fuzhou and Shenzhen.

Air China will also expand its network to 14 US cities with code-sharing flights.

Li Jiaxiang, president of Air China, said co-operation with United is a key component of Air China's globalization strategic efforts.

"So long as we can benefit from such co-operation, Air China will seek partnerships with all major world airlines,''Li said.

Li denied the co-operation with United is to form a connection with the so-called Star Alliance, an airline club that consists of 15 global airlines.

United Airlines, and another code-share partner of Air China--the German-based Lufthansa Airlines, are all founding members of the club.

"It's still not the time for Air China to make decisions on joining an international alliance, though we have been thinking of it,'' Li said.

Li indicated that Air China's business was stricken by the breakout of Severe Acute Respiratory Syndrome (SARS) this April and May, and that profits had recovered since July.

"We achieved consecutive positive operating records in 2001 and 2002,'' Li said.

SARS negatively affected the company's earnings this year, although without the crisis, the company would have has a positive balance sheet.

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