lliance between Australian budget airline Virgin Blue and Air New Zealand has been given the go ahead by Australia's competition watchdog.
The regulator said it would allow the carriers to co-ordinate prices, scheduling, capacity and routes for flights between the two countries.
It had rejected the plan in a draft decision in September.
But it said it now had more information about the probable impact on customers and felt able to back the plans.
One condition of the approval was for more seats to be made available on certain flights to restrict the ability of the two airlines to raise fares.
Chairman of the Australian Competition and Consumer Commission (ACCC), Graeme Samuel said: "We consider that the alliance is likely to benefit passengers in a number of ways including more choice of routes and frequencies, and potentially lower fares as a result of cost savings and efficiency improvements."