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Regulator Allows Virgin Australia Tie-Up With Rival Tiger

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Australia's competition regulator has granted Virgin Australia approval to take control of loss-making rival Tiger Australia in a move that will ramp up competition for Qantas Airways in the lucrative domestic market.

(Read More: Branson: United Tried to 'Damage Us' With 40% Fare Cut)

Virgin, Australia's No. 2 carrier, in October announced plans to buy 60 percent of Tiger Australia for A$35 million and invest a further A$62.5 million to increase the fleet size to 35 aircraft from 11 by 2018.

As part of the deal, Singapore Airlines would buy a 10 percent stake in Virgin Australia.

(Read More: Virgin America, Singapore Airlines Expand Partnership for Frequent Fliers)

The Australian Competition and Consumer Commission said it had decided not to oppose the deal on the basis that Tiger Australia, owned by Tiger Airways, was unlikely to remain in the local market without the Virgin investment.

The deal is expected to put pressure on top Australian carrier Qantas and its budget arm Jetstar.

(Read More: Luxury In-Flight Shopping: Virgin Atlantic to Offer Art for Sale)

"Virgin Australia now has the opportunity to pursue its stated objective of transforming Tiger Australia into an effective competitor to Jetstar for price sensitive travelers," the ACCC said in a statement.

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