European-based global aviation giant, Deutsche Lufthansa AG (Lufthansa), revealed to China Daily that it is getting closer to completing negotiations with one of its Chinese counterparts, Shanghai Airlines Co Ltd (Shanghai Airlines), for a possible code-sharing agreement and cooperation in other areas.

"Our talks with Shanghai Airlines (about possible code sharing) are in the final stage. In our eyes, Shanghai Airlines is quite an accomplished regional carrier and a good partner to work with as well," Carsten Spohr, Lufthansa's vice-president of Strategy and Alliances, said.

Lufthansa already has a code sharing programme with Air China on Sino-German flights. And the German flag carrier seems very keen to find more partners in China to further expand business in the promising aviation market.

"We have smooth cooperation with Air China, and we would like to find more local partners... The Chinese market is so big that it can, without doubt, accommodate a lot of competitors and can offer quite a lot of opportunities for further growth," Wolfgang Mayrhuber, chairman and chief executive officer of Lufthansa, told China Daily.

Shanghai Airlines, a regional carrier based in East China, has submitted its application to open long-distance international flights to Germany, a move widely seen by many industrial insiders as a positive one that will help break the monopoly on major international flights held by the three major Chinese aviation groups, namely, Air China, China Eastern Airlines Co Ltd and China Southern Airlines Co Ltd.

It is believed that the application will soon be approved by the General Administration of Civil Aviation of China (CAAC), the country's aviation watchdog.

But Shanghai Airlines has so far remained tight-lipped concerning its application for flights to Germany or the potential code sharing partnership with Lufthansa.

"We have nothing to say about the issue at the moment, since we are still waiting for approval from authorities to go ahead," a Shanghai Airlines media official told China Daily recently, on condition of anonymity.

About the possible co-operation with Lufthansa, the official also preferred not to give any comment, because its application to fly to Germany is still on the table at the CAAC.

However, Yang Yuanyuan, head of CAAC, seems very likely to endorse Shanghai Airlines' application. "We will open the domestic aviation sector further by giving smaller players the same rights as the three major groups," Yang has said.

Lufthansa is also expecting closer ties with Air China, China's flag carrier and the German carrier's traditional partner in China.

"Maybe in the future, we would be happy to see Air China joining the Star Alliance, of which Lufthansa is one of the founding members," Spohr added.

South African Airlines joined the Star Alliance very recently, giving Lufthansa access to that country.

Lufthansa is leading other European competitors in China in terms of flights available in the local market.

The carrier has been operating 31 non-stop weekly flights between China and Germany since February 1, when it opened its Guangzhou-Munich flights.

In addition to the new flights, Lufthansa offers flights from Hong Kong to Frankfurt; Beijing to Frankfurt; Shanghai to Frankfurt; and Shanghai to Munich.

(China Daily March 10, 2004)