Air Canada and United Continental Holdings have unveiled plans to create a joint venture to bolster their position on United States-Canada transborder flights.

A memorandum of understanding signed by the partners said the arrangement would help both airlines compete more effectively, while supporting substantial service and pricing benefits for passengers.

“Working cooperatively with our partner Air Canada, we can create a more streamlined travel experience for customers travelling between the United States and Canada, providing more travel options and benefits while reducing travel times,” said Jeff Smisek, United Airlines new president and chief executive officer.

United Continental Holdings was created earlier this month following the closing of a merger deal between United Air Lines and Continental Airlines.

Air Canada

Air Canada hopes its transborder network of 59 cities in the United States will be bolstered by United’s presence in 210 US airports. In turn, United’s network of 16 Canadian cities will gain the 59 communities Air Canada presently serves.

The airlines expect to launch the venture in early 2011.

“This joint venture between United Airlines and Air Canada will provide many benefits and revenue synergies on this important market allowing us to compete more effectively,” explained Air Canada president Calin Rovinescu.

“As founding members of Star Alliance, Air Canada and United have benefited from a close relationship, as have our customers through a simplified travel experience and loyalty rewards.”

The deal is subject to Air Canada and United Airlines making the necessary filings, obtaining regulatory approvals and finalising documentation.

The carriers already benefit from anti-trust immunity granted by the US Department of Transportation.