Etihad Airways and Air France-KLM today announced a major strategic partnership that will see the airlines offer joint codes on destinations in Europe, the Middle East, Asia and Australia and link ups between their frequent flyer programmes.
From the end of this month the airlines will also begin integrating their flight operations to include joint procurement, maintenance and repair collaboration, and other economies of scale across their organisations.
However, the deal does not require the airlines to make an equity investment in any of the partner companies.
Air France-KLM and Air Berlin, in which Etihad Airways holds a 29.21 per cent stake, today also announced a mutual codeshare agreement allowing customers of each of the two carriers to fly seamlessly on all the routes operated by the other between France and Germany.
"This deal, Etihad Airways' 40th codeshare, marks a momentous milestone for both airline groups and offers countless opportunities to develop an unrivalled commercial relationship," said James Hogan, Etihad Airways' president and chief executive officer.
"It reflects the core elements of Etihad Airways' 10-year master plan, driven by organic network growth, combined with the forging of strategic codeshare partnerships and minority equity investments in other airlines.
"The linking together of these three components, as we continue to strengthen our bilateral agreements, means all the pieces of our plan are coming together."
Collectively, the two airline groups expect to carry more than 85 million passengers in 2012.
Initially, the agreement between Etihad Airways and Air France-KLM will see the Abu Dhabi-based carrier's EY code placed on Air France flights between Paris Charles de Gaulle airport and Bordeaux, Copenhagen, Madrid, Nice and Toulouse.
The EY code will also be placed on KLM flights between Amsterdam and Abu Dhabi, Billund, Cardiff, Newcastle, Oslo and Stavanger.
Air France will initially place its AF code on Etihad Airways flights between Abu Dhabi and the Seychelles, the Maldives, Colombo, Dhaka, Kathmandu and Islamabad.
KLM will initially place its KL code on Etihad Airways flights between Abu Dhabi and Sydney, Melbourne, Islamabad, Colombo and Lahore.
The new strategic partners will also work together on the proposed integration of frequent flyer programs which includes reciprocal 'earn-and-burn' privileges for 1.5 million Etihad Guest members and 21 million Air France-KLM Flying Blue frequent flyers across the combined networks.
"This deal enables us to further extend our global reach and now gives us a combined network of 321 destinations - the largest of any Middle East carrier," Mr Hogan added.
"The agreement also opens up many new markets for our passengers in Europe and reinforces the importance of strategic commercial partnerships as one of the key enablers for accelerated growth of our network.
"Partnerships are delivering a major source of our revenue growth, by extending our network reach and putting our brand directly in front of millions of new customers. This year to date, they are providing 18 per cent of our revenues and will be a major contributor to our sustained profitability growth this year and into the future."
Air France and KLM are members of the SkyTeam alliance which has 18 member airlines, offering customers access to a global network of over 14,800 daily flights to 993 destinations in 186 countries.
The airlines, which merged 2004, carried 75.8 million passengers and 1.1 million tonnes of cargo last year. The Group's fleet comprises 586 aircraft, including 173 regional aircraft covering 230 destinations in 113 countries from its hubs at Paris-Charles de Gaulle and Amsterdam-Schiphol.
"This new partnership between Air France-KLM and Etihad Airways and airberlin reflects our Group's strategic positioning to ensure the best possible services between Europe and the rest of the world, by developing our network and airline partnerships," said Jean-Cyril Spinetta, Air France-KLM chief executive officer.
Etihad Airways, the national airline of the United Arab Emirates, began operations in 2003, and in 2011 carried 8.3 million passengers. From its hub at Abu Dhabi International Airport, Etihad Airways serves 87 passenger and cargo destinations in the Middle East, Africa, Europe, Asia, Australia and North America, with a fleet of 67 Airbus and Boeing aircraft, and 100 aircraft on order. Etihad Airways also holds equity investments in Air Berlin, Air Seychelles, Virgin Australia and Aer Lingus.