The joint venture between Virgin Australia and Tiger Australia has been described as a "real opportunity" to grow competition in the budget travel sector by Virgin boss John Borghetti.
Virgin's proposed acquisition of a 60% stake in Tiger, first announced in October, received the green light from the Australian Competition and Consumer Commission today. The deal will see both carriers invest a combined total of up to $62.5 million into the business.
Borghetti insisted the deal will better serve travellers by growing competition in the budget segment, will flow-on benefits for tourism as a whole.
"By partnering with Tiger Airways, we can use our local expertise to build a sustainable budget carrier, which will offer great value airfares and benefit jobs and tourism in Australia," he said.
Tiger's group chief executive Koay Peng Yen highlighted the benefits of the partnership for its troubled Australian offshoot.
"The joint venture will result in a stronger Tiger Australia, allowing it to leverage the strengths of both its shareholders in network planning, operational management, and procurement, with a low cost and internet-based distribution platform," he said.
"With two strong shareholders, Tiger Australia will be better-positioned to tap opportunities for further expansion in terms of fleet and market reach."
Meanwhile, the Tourism and Transport Forum said the decision would ensure Tiger's survival in the Australian market which is good news for consumers.
“This is a sensible outcome which will benefit Australia’s $96 billion tourism industry and the 514,000 people it directly employs," acting chief executive Trent Zimmerman said.
“Maintaining a second low-cost carrier will ensure healthy competition at the price-sensitive end of the market."
However, the transaction remains subject to certain conditions and regulatory approvals, including from the Foreign Investment Review Board.
