Watchdog signs off on Virgin-Etihad deal

Australia's competition watchdog has formally cleared the way for Virgin Blue to partner with Abu Dhabi-based Etihad Airways for five years.

In its ruling, the ACCC said it considered that the alliance was likely to promote competition and result in new international services, in particular between Australia and Abu Dhabi with onward connections to Europe.

The five-year alliance enables Virgin's V Australia brand to compete with rival Qantas on the Australia-Europe routes.

Under the arrangement V Australia will fly to Abu Dhabi three times a week from Sydney where passengers will be able board Etihad jets and fly to a range of European destinations.

Both airlines will cooperate on joint pricing and service scheduling across their networks, but will not share revenue.

Preliminary approval was given by the ACCC late last year which allowed both carriers to advertise and sell tickets ahead of the first flight next month.