Etihad Airways and Virgin Blue Group have won interim authorisation from the Australian Competition and Consumer Commission (ACCC) to form an alliance on flights to Abu Dhabi.

Under the terms of the decision the ACCC endorsement allows both airlines to beginning preparations for an alliance before a final ruling.

On the ground this will see the promotion of a new combined global flight network to customers from the start of October.

Etihad Airways chief executive, James Hogan, said: “The ACCC decision to grant interim approval for this strategic alliance is clearly fantastic news for both Etihad and Virgin Blue and one we welcome wholeheartedly.

“We will look to expand the partnership further over time, but there can be no doubt of the positive impact this new alliance will have on the global tourism industry, especially as signs of recovery continue to emerge.”

Etihad chief James Hogan welcomes the deal with Virgin Blue

The agreement will see the airlines integrate their Etihad Guest and Velocity frequent flyer programs, allowing members to earn status/tier points and frequent flyer points.

Another element of the partnership will see Virgin Blue’s international arm, V Australia, launch direct services to Abu Dhabi from February 2011.

This will bring the total number of flights operated between the two carriers between Abu Dhabi and Australia to 27 a week.

These services include double-daily flights between Abu Dhabi and Sydney, daily between Abu Dhabi and Melbourne, and six frequencies per week between Abu Dhabi and Brisbane.

Turbulence

The ACCC earlier blocked a proposed tie-up between Air New Zealand and Virgin Blue for flights across the Tasman Sea on concern it may reduce competition.

“The ACCC believes Virgin Blue is a significant competitor to Air New Zealand and there are a number of trans-Tasman routes where the alliance raises competition concerns,” ACCC chairman Graeme Samuel said.

“These routes account for around one quarter of passenger traffic in the trans-Tasman market.

“This means that more than one million passengers per year may be adversely affected by the removal of competition between Virgin Blue and Air New Zealand.”

Both carriers can provide more information by September 24th before a final decision, the antitrust regulator said in its September 10th draft ruling.

The US Transportation Department has also blocked Virgin Blue’s plan to ally with Delta Air Lines on flights between Australia and the US east coast.