Aéroports de Paris (ADP) and the Schiphol Group are to sign a long term alliance to create a dual hub.
The new grouping will offer travellers 143 destinations, the highest in the world.
The deal will also create synergy savings of €71m per year by 2013 and a cut in capital spending of €18m a year from 2013 onwards.
ADP, which runs Paris's two airports Charles de Gaulle and Orly, and Schiphol, which runs Amsterdam's airport, said the agreement will also allow them to mount joint ventures to acquire and run airports around the world.
The deal follows the successful merger of the French and Dutch national carriers Air France and KLM which are, respectively, the largest operators at ADP and Schiphol.
Under the deal to be completed next month ADP will pay €370m for an 8% stake in the Schiphol Group while the latter will acquire a similar holding in ADP for €530m.
The two airports have a catchment areas of 59m while ADP is the second largest airport group in Europe, handling 84.6m passengers a year and Schiphol the fifth largest with 50.4m passengers a year.
A statement for the two groups said the case for an alliance was "compelling."
It added: "The cooperation will improve the competitiveness of both airport groups through the consolidation of a dual-hub concept."
This would enable the airports to offer increased and diversified destinations and frequencies."
Pierre Graff, ADP's chairman and ceo, said: "This cooperation represents a breakthrough transaction in our industry and a unique opportunity to improve our operations and our competitiveness in the new worldwide airport landscape.
"This acquisition and our future cooperation with Schiphol Group will bring great value to our shareholders, customers and employees."
Mr. Gerlach Cerfontaine, Schiphol's president and ceo, said: "This collaborative venture signifies an important strategic choice for the dual-hub system in the consolidation process that is taking place in the global aviation industry.
"It gives Aéroports de Paris and Schiphol Group the edge over other airports and creates a leading network of connections for European and worldwide transfer travellers.
"This move is certain to improve our competitiveness, as well as that of SkyTeam, relative to our competitors in Europe and the Middle East.
"In addition, the strengthening of quality of the services and our principal airport processes will offer advantages to all users of our airports - airlines and passengers alike."
Visit www.schipholgroup.com and www.aeroportsdeparis.fr.