Air New Zealand
Air New Zealand upped its take in Virgin Australia by 5%. The acquisition seeks to improve the competitiveness of the two airlines against Qantas and Jetstar. REUTERS/Mark Baker

Australia’s budget airline Virgin Blue and Air Zealand got approval for alliance from the New Zealand government on Tuesday. The coalition between the two airlines of pacific nations will help increase operations in the regions, said media reports.

More sustainable competition, cost savings and the commitment both airlines have made to maintain trans-Tasman passenger numbers will be major benefits of the alliance, Steven Joyce, transport minister of New Zealand was quoted as saying in media.

Both the countries have agreed to a three year alliance during which both the airlines will have to coordinate over schedules, routes between New Zealand and Australia, airfares, and capacity. Further continuation of alliance will depend on how efficiently the airlines go about the treaty in the three-year period.

How Air New Zealand and Virgin Blue implement the alliance, as well as the state of the market, will be taken into account in deciding whether further authorization is given, Joyce said in a statement.

Union of airlines in the past also have had positive contributions to better flying experience with regular flight schedules, low fares and higher flight frequency. The tie-up between Air New Zealand and Virgin Blue is expected to bring more tourists in the Pacific.