The New Zealand Ministry of Transport (MoT) today approved the proposed alliance between Virgin Blue and Air New Zealand, allowing the two to operate integrated services on trans-Tasman routes.

The decision follows the receipt of authorisation from the Australian Competition and Consumer Commission (ACCC) last week. It meant the airlines have cleared all the regulatory hurdles to start the alliance.

Transport Minister Steven Joyce said, "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."

The Trans-Tasman alliance covers three areas of cooperation: a broad free-sale code share arrangement covering all Tasman sectors 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 agreement.

Virgin Blue chief executive John Borghetti said the decision paves the way for the company to provide a competitive offering to corporate as well as leisure travellers in the region.

"A Velocity member will have three times as many options to earn and burn across the Tasman under the alliance," he said.