The Australian Competition and Consumer Commission (ACCC) has given the go-ahead for the proposed trans-Tasman alliance between Air New Zealand (NZE:AIR) and Virgin Blue (ASX:VBA).

"The ACCC considers 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," said ACCC chairman Graeme Samuel in a statement on Thursday.

Virgin Blue chief executive John Borghetti said the ACCC's approval of the alliance with Air New Zealand on the Trans-Tasman paves the way for Virgin Blue to provide a competitive offering to corporate as well as leisure travellers in the region.

According to him, "a Velocity member will have 3 times as many options to earn and burn across the Tasman under the alliance."

Air New Zealand Chief Executive Officer Rob Fyfe said he is "pleased that formal approval has been given recognising the benefits this will bring to our customers,"

As part of the process Air New Zealand and Virgin Blue were able to respond to the ACCC's draft determination and address initial concerns by providing guarantees on capacity growth.

"I would like to thank the ACCC for its thorough consideration of the issues and coming to a determination that favours customers and will see the Tasman market continue to grow," said Mr Fyfe.

Air New Zealand said it is expecting a decision on its alliance application to the New Zealand Minister of Transport within the next few days.

The alliance comprises a broad free-sale code share arrangement covering all Tasman sectors currently operated by either airline and domestic sectors forming part of a connecting Tasman journey; a revenue allocation agreement supported by a joint trans-Tasman network planning and revenue management team; and a reciprocal frequent flyer and lounge access agreements.