China Eastern Airlines signed a co-operation agreement with Taiwan-based China Airlines on Friday to start a frequent flyer scheme.

"The programme, which will take effect on October 1, is part of the new round of co-operation between the two airlines," said Zhang Jianzhong, deputy general manager of China Eastern Airlines Co Ltd.

China Eastern launched the "one-ticket service" in 1996 by co-operating with China Airlines.The aim was to help passengers bound from Shanghai to Taiwan avoid check-in procedures when they switch planes in Hong Kong.

At present, more than 400,000 Taiwan business people are living in Shanghai and its neighbouring provinces.

"Passengers going to and from Taiwan are increasing, and they need more convenient and better services," said Zhang.

Under the new programme, passengers who are members of Eastern Miles Club can accumulate airmiles when they take flights with China Airlines. The same benefit applies to China Airlines airmiles club members.

Local insiders said the co-operation between the two airlines is aimed at challenging the fiercer competition on the air routes from Shanghai to Hong Kong and from Taipei to Hong Kong.

"The move will be greatly favourable to the business people who are living in the Yangtze Delta," said Zhang.

China Eastern has 30 daily flights from East China to Hong Kong and China Airlines has daily 17 flights from Taiwan to Hong Kong.

"The co-operation indicates that there is a growing need to develop the commercial links of the airlines between the Taiwan Straits," said Brian Chou, senior vice-president (marketing) of China Airlines.

He hoped the co-operation would expand into other spheres.

"More co-operation plans with China Eastern will surface in the near future," Chou said.

These will include the sale of electronic tickets and the expansion of the sales channels, he added.

China Eastern is currently discussing with China Airlines the possibility of establishing a code-sharing co-operation, said Zhang. But such a scheme will not be available in the near future, he added.

China Airlines has set up an office in Guangzhou, Guangdong Province to serve its Pearl River Delta market.

The frequent flyer plan with China Airlines is China Eastern's second with overseas airlines, following its co-operation with Cathay Pacific.