The Australian Competition and Consumer Commission (ACCC) has approved a proposed alliance between Virgin Australia and Singapore Airlines.
"The ACCC 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," ACCC chairman Rod Sims said in a statement.
SIA and Virgin Australia compete on a limited number of routes, and there are other competitors on those routes as well, the ACCC said in its draft findings.
"Therefore, the ACCC view is that the alliance is unlikely to result in significant anti-competitive detriment in any of the relevant markets," said the agency.
"The proposed Singapore Airlines alliance is a key plank in Virgin Australia's strategy to build an international network of airline partners that offers global coverage," said John Borghetti, CEO of Virgin Australia.
The alliance, which was announced in June, will allow the two carriers to codeshare on each others' flights and collaborate on routes, pricing, schedules and sales.
In the application, Virgin also requested for an allocation of 1,625 seats of third-country carrier codeshare from Australia to the Indian cities of Mumbai, New Delhi, Kolkata, Chennai, Bangalore and Hyderabad.
The ACCC said the alliance is likely to make Virgin Australia more competitive with other airlines, including national carrier Qantas.
The ACCC is expected to make its final ruling by year end. The two airlines are also waiting for approval from the Competition Commission of Singapore.