Virgin Australia has moved a step closer to seizing control of regional airline Skywest after receiving the go-ahead from the competition watchdog.
The Australian Competition and Consumer Commission (ACCC) on Thursday cleared the deal, saying it was unlikely to lead to a substantial lessening of competition.
"The message that we received from the market was broadly supportive of the proposed acquisition," ACCC chairman Rod Sims said in a statement.
"The services that Virgin and Skywest supply are seen as largely complementary, rather than competitive with each other."
Virgin surprised the market last October when it announced a $98 million bid for Skywest and a 60 per cent buy-up of another budget carrier, Tiger Airways, for $35 million.
Virgin is paying 22.5 cents for every Skywest share.
The ACCC said it had considered competition issues involving services offered by Qantas and other regional airlines operating in Western Australia, including transfer flights between Perth and Broome as well as charter services.
However, it has not yet made a decision on Virgin's plan to buy a major stake in Tiger, saying it expected to make an announcement on February 7.
Virgin welcomed the ACCC's decision, saying it hopes the deal will allow it to accelerate its expansion in regional areas and the growing fly-in, fly-out market for miners in Western Australia.
"It will also be very positive for business and tourism, particularly in Western Australia and regional Australia, as we will invest to support the growth of Skywest," Virgin chief executive John Borghetti said.
The ACCC's approval of the Skywest takeover came six weeks after Singapore's corporate regulator gave the nod to the deal.
Skywest, which serves the West Australian market, is incorporated in Singapore.
The Foreign Investment Review Board, Singapore's High Court and Skywest shareholders are yet to approve the acquisition.
Virgin hopes its Skywest takeover will give it a slice of the lucrative fly-in, fly-out market in mining-rich Western Australia.
Skywest also has flights to Darwin, Melbourne and Denpasar in Bali.