Virgin Blue Holdings Ltd (ASX:VBA) has been given the preliminary go-ahead for its proposed alliance with Middle East-based airline Etihad.
The Australian Competition and Consumer Commission has today announced interim approval which allows the airlines to start to prepare for the alliance and promote it to travellers ahead of the regulator's final decision.
Under the tie-up, Virgin Blue and Etihad have agreed to cooperate on joint pricing and scheduling on services across their networks.
The alliance is also expected to add capacity between Australia and Abu Dhabi.
In granting the authorisation, the competition watchdog says it has taken into account that neither airlines operate any competing services, as well as the lead time required to market and sell tickets before the start of long-haul services.
The ACCC says customers who book one of the new services before the final authorisation are likely to be affected if the deal is denied.
However, Virgin Blue and Etihad have put in place route protection plans to manage the travel arrangements of any affected passengers.
In the 2010 financial year, Virgin Blue booked a profit of $21.3 million.
VBA Price at posting:
45.5¢ Sentiment: None Disclosure: Held
