Australia's competition regulator on Thursday gave its preliminary approval to a tie-up between Singapore Airlines and Virgin Australia, saying it would boost the local market.
"The (Australian Competition and Consumer Commission) considers that this alliance is likely to result in material benefits to the public including enhanced products and services, in particular increased online connectivity for passengers," said ACCC chairman Rod Sims.
The agreement will see full cooperation between the Asian carrier and Virgin on their Australia-Singapore services, including joint pricing, scheduling, sales and marketing.
The ACCC will seek further submissions from the carriers and other interested parties before making a final decision. A decision is also pending from Singapore's competition regulator.
Singapore Airlines welcomed the draft ruling.
"Our partnership with Virgin Australia will enable us to deliver a best-in-class travel experience across Australia," said regional vice-president Subhas Menon.
Virgin chief John Borghetti said the deal was a "key plank" in Virgin's global expansion plans and would be a boon for Australian tourism.
"Both airlines will promote Australia in many cities throughout Asia," Borghetti said.
The deal follows an announcement by Virgin's major rival, Qantas, that it plans to launch two new Asia-based airlines, including a premium brand that will reportedly be based in either Kuala Lumpur or Singapore.
The second, Jetstar Japan, is a low-cost joint venture with Japan Airlines and Mitsubishi.
Qantas has lost significant market share to Asian and Middle Eastern carriers expanding in Australia, and warned its international arm would suffer a slow death if it did not undertake a radical overhaul.
by Martin Parry
(c) 2011 AFP
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