Virgin Australia's acquisition of a 60% stake in Tiger Australia can now move forward as the competition regulator announced it will not oppose the deal.
The Australian Competition and Consumer Commission (ACCC) said it had reached the decision following "thorough and extensive testing" which found that Tiger would be unlikely to remain in the local market if the deal did not go ahead.
Chairman Rod Sims pointed in particular to Tiger's history of "poor financial and operational performance".
"In six years, Tiger has never made an operating profit, and its current losses are large," he said. "These losses remain a big drag on the entire Tiger group."
The ACCC predicted that, if the deal were not to proceed, Tiger's 11 aircraft would "very likely" be redeployed into the Asian operations of its Singapore-based parent company.
In addition, Sims said the deal is unlikely to lead to a "substantial lessening" of competition in the Australian domestic aviation market.
"Virgin Australia now has the opportunity to pursue its stated objective of transforming Tiger Australia into an effective competitor for Jetstar for price sensitive travellers," he said.
The approval does not include any conditions to grow Tiger's fleet at a predetermined rate – once touted as a possibility.
