Virgin Australia and Singapore Airlines have inked a "major alliance strategy" that will help transform Virgin Australia into a global airline and create problems for rival Qantas international operations.

The alliance will allow Virgin and Singapore Air customers to share each airline's international and domestic flights. The agreement will also bolster Singapore Airlines' international network allowing the airline to use Virgin Australia's network of Australian and Pacific destinations. Under the new deal the two airlines' will also participate in joint sales, marketing strategies and the incentive to offer passengers frequent flyer benefits and lounge networks under both airlines.

According to report on the Sydney Morning Herald the proposed deal also completes what Virgin Australia CEO John Borghetti describes as his airline's "major alliance strategy". Asia was the last region that Virgin needed to find an alliance partner in.

Virgin Australia has already allied itself with other airlines with networks in the Middle East and Europe, New Zealand and the U.S via its alliance with Delta. This newest alliance allows Virgin Australia to connect passengers to more than 400 international destinations.

Singapore Airline CEO Goh Choon Phong remarked in the signing of the contract that Singapore Air wants to seek growth for the airlines. Borghetti said that "This is a huge step forward for us," while explaining what passengers will expect from this new deal.

Virgin passengers will now be able to fly to Silk Air destinations and they will now have an easier time with transferring from one city to another. There are still no plans for Virgin Australia to join Star Alliance, Singapore Airlines' international alliance but each CEO has suggested that the alliance will still grow in the next few years.

This new move is another step in Virgin Australia's aggressive tactic against Qantas. It has revamped its premium lounge services and commenced a business class service for the first time to directly compete with Qantas on the Sydney-Perth route. In the next few months Virgin will also be re-launching its frequent flyer program.

The deal with Singapore Air will still need to be approved by the Australian Competition and Consumer Commission. Virgin Australia hopes to have the airline alliance in full operation by the end of the year.