Air-India and Lufthansa on Tuesday signed a strategic alliance agreement paving the way for joint development of air services on the India-Europe-US route.

The alliance covers global code-sharing, harmonizing sales and marketing and a joint frequent flyer programme, A-I Chairman and Managing Director V Thulasidas and Lufthansa Chairman Wolfgang Mayhrubher told newsmen after signing the agreement.

Thulasidas told PTI that A-I was also in discussion with UK-based regional carrier British Midlands for co-operation, which could include seeking of slots at London's Heathrow airport for its five flights planned for next year.

Mayhrubher said the code-share was customer driven and is a free flow (any number of seats) one on both the airlines.

He said Lufthansa had similar agreements with other airlines which led to the formation of Star Alliance and this (agreement) would not have any impact with other airlines.

He said the Lufthansa group would look at other areas like cargo, IT, ground handling and leisure travel for tie-ups. "We are looking at our needs and there is no concrete plan as yet," he added.

"We are banking on the dynamism of this market and can see considerable potential through co-operation," he added.

Thulasidas said the India-US market would be served through Frankfurt. A-I would link Bangalore, Hyderabad and Kochi or Thiruvananthapuram with direct flights to Frankfurt and enhance Delhi flights to a daily basis to US west coast.