Australian regulators have given interim approval to a partnership between Virgin Australia and Virgin Atlantic that will see them cooperate in the Australia-UK market.

The Australian Competition and Consumer Commission (ACCC) decision will allow the two airlines to partner on flights that meet at “mutual midpoints” in Hong Kong, Los Angeles, and “any other future mutual connecting points.” They already codeshare, but the airlines wanted to coordinate more closely on pricing, inventory and marketing strategy.

“We do not think this enhanced cooperation is likely to lessen competition on the routes between Australia and the British Isles,” ACCC commissioner Sarah Court said.

The interim authorization “will remain in effect while the ACCC considers the application for authorization in more detail,” the agency said. The next step will be a draft determination, which is expected to be issued in September and will be open for public comment. A final determination is tentatively scheduled for November.

According to an ACCC summary, Virgin Australia and Virgin Atlantic said approval would allow them to establish “metal neutral policies … including the exploration of revenue sharing opportunities to achieve this.”

Virgin Australia told the ACCC that the Virgin Atlantic partnership would help improve the sustainability of its Australia-Hong Kong flights. Virgin Australia noted that rivals Qantas and Cathay Pacific have larger shares and higher load factors in the market.

Virgin Australia forecast a significant drop in its financial performance for its fiscal year through June 30, prompting the airline to plan capacity and network cuts.

Paul Scurrah took over as the new CEO of the Virgin Australia Group in March. He moved to defer deliveries of Boeing 737 MAX aircraft and restructured senior management positions.

Adrian Schofield, adrian.schofield@informa.com