Australia's competition regulator has given its tentative approval for an alliance between Virgin Blue and Etihad Airways.
The Australian Competition and Consumer Commission has issued a draft determination proposing to grant authorisation to the alliance, ahead of a final decision expected in the near future.
Virgin Blue and Etihad plan to work together on pricing and scheduling across their networks. They were granted an interim approval by the ACCC in September, which allowed the airlines to begin preparations for the alliance and market tickets.
"The ACCC considers that the alliance is likely to promote competition and result in benefits for Australian consumers through new international services and increased online connections," says ACCC chairman Graeme Samuel.
The alliance is not likely to cause "public detriment" since the airlines do not currently compete on any routes, he adds.
As part of the alliance, Virgin Blue's long-haul subsidiary V Australia plans to offer thrice-weekly Sydney-Abu Dhabi services from February 2011 and thrice weekly Brisbane-Abu Dhabi services a year later.
Eventually, the two airlines aim to jointly offer 27 weekly services between Abu Dhabi and Australia.
The ACCC says it will now seek further submissions from the carriers and interested parties before it issues a final decision.