Closer co-operation between Virgin Australia and Virgin Atlantic on flights between the UK and Australia has been given the initial green light.

Australia’s competition watchdog today proposed to authorise the two airlines to “more closely co-operate” on flights between Australia and the UK and Ireland, via Hong Kong, Los Angeles and other potential connecting points.

 Virgin Australia believes this will increase passenger numbers, enabling it to “more sustainably” operate its Hong Kong service.

Virgin Australia and Virgin Atlantic are separate businesses that do not operate overlapping services on any routes and are unlikely to do so in the future.

They already have a codeshare arrangement, which allows each to market flights on planes flown by the other.

Authorisation by the Australian Competition and Consumer Commission will allow the two airlines to co-ordinate in a “wide range of areas, such as jointly managing prices, inventory, and marketing strategies, which are not currently permitted in their existing arm’s length commercial codeshare and loyalty arrangements.

ACCC commissioner Stephen Ridgeway said: “Virgin Australia and Virgin Atlantic have asked to be authorised to co-operate more closely to improve their services between Australia and the UK and Ireland and attract more passengers.

“In authorising this co-operation, we expect to see improvements to the carriers’ schedules and services to passengers.”

The move comes less than a month after Virgin Australia announced 750 job losses as it posted a full year loss of almost A$350 million.