Airline alliance

Air New Zealand and Virgin Blue will form an alliance on trans-Tasman routes, after the competition regulator dropped its opposition to the plan. After indicating three months ago that it would block the deal, the competition regulator will now allow the two airlines a partnership of three years — two years less than the airlines had sought. Although the Australian Competition and Consumer Commission (ACCC) chairman, Graeme Samuel, said the alliance was ‘‘likely to benefit passengers’’ by giving them more frequencies and potentially lower fares, he remained concerned that it may affect competition on a number of trans-Tasman routes such as those to Wellington. The regulator has forced the airlines to increase capacity on those routes it fears could be adversely affected. This is to prevent them from lifting fares by slashing flights.