ANA, Asiana Expand Code-Sharing Agreement

Japan's All Nippon Airways Co. Ltd. and South Korea's Asiana Airlines have expanded their code-sharing agreement and will also collaborate in sales, operations, and purchasing.

The two airlines -- both the second-largest in their home countries -- will code-share on all 18 routes flown between Japan and South Korea by the two carriers by February 2007, up from six routes at present, Asiana said.

Code-sharing is an agreement where a flight by one airline is also marketed as a flight for one or more other airlines. Both ANA and Asiana are members of the Star Alliance group of airlines.

Improving relations between Japan and South Korea have led to growing air traffic between the two countries and increased demand for airline seats. The code-sharing agreement should improve the two airlines' operating costs and running efficiency.

This will be especially beneficial when Haneda Airport, Japan's largest domestic hub, adds another runway in 2009. The Government will consider changing Haneda to an international l hub for short distance regional flights. In an interview with CNBC Asia's "Market Watch", Satoru Aoyama of Fitch Ratings said he is, "expecting that this will have significant benefits to the two airlines after 2009."

Over the past few years ANA has thrived compared with bigger rival Japan Airlines Corp. , making progress in downsizing its fleet, cutting costs and shifting its focus to more profitable routes used by business travelers.

JAL has lost customers to ANA, especially on domestic routes, after a series of safety problems and management in-fighting.