The New Zealand government has approved an alliance between national carrier Air New Zealand and Virgin Blue, Air NZ said on Tuesday.
The approval was the final hurdle to the two airlines co-operating on code-share, scheduling, and support services on flights between Australia and New Zealand.
"We and Virgin Blue have a team working closely to ensure we move ahead quickly with bringing the alliance to life over the coming months," Air NZ chief executive Rob Fyfe said in a statement.
Australia's competition watchdog gave the alliance the nod last week after it reversed an earlier draft ruling which was opposed to the tie-up. The airlines say the alliance will let them more effectively compete with Qantas Airways and its budget arm, Jetstar.
Eleven airlines currently fly between New Zealand and Australia. Air NZ has around 38 percent share, Qantas and Jetstar about 32 percent, and Virgin's Pacific Blue 18 percent.