An alliance between Qantas and Emirates has been given the green light by Australian regulators but part of the deal still needs approval in this country.

The Australian Competition and Consumer Commission yesterday gave the airlines the nod, saying the alliance was likely to result in public benefits through enhanced products and services by the airlines, and improved operating efficiencies. A tourism group and travel firm in this country have welcomed the deal as being good for bringing in more visitors and giving Kiwi travellers more choice.

Minister of Transport Gerry Brownlee must approve the application relating to the airlines' Tasman operations before it can be finally approved.

A Ministry of Transport spokesman said it was hoped he would consider it "in due course" but until he approved it the transtasman part of the alliance was "not a done deal".

In granting its approval, the ACCC said where there was overlap of services in other parts of the world there was competitive pressure to ensure the impact on fares and freight rates was minimal.

"The one exception is the transtasman where Qantas and Emirates compete on four routes which accounted for around 65 per cent of total passenger capacity between Australia and New Zealand. On these routes, the ACCC is concerned that Qantas and Emirates will have the ability and incentive to reduce or limit growth in capacity in order to raise airfares," said commission chairman Rod Sims.

The commission has imposed a condition which requires the airlines to maintain at least their pre-alliance capacity on the four overlapping transtasman routes, subject to a review to consider whether increases in the minimum required capacity are warranted.

Qantas and Emirates said they welcomed the decision which would provide passengers with a "seamless" international and Australian network, frequent flyer benefits and world-class travel experiences.

Qantas' international airline has been hit by heavy losses and chief executive Alan Joyce said its future was much brighter with the partnership.

Tourism New Zealand has welcomed the deal which it says would contribute to a clear choice being offered between Asian and Middle Eastern routes to New Zealand.

A TNZ spokesman said Emirates' multiple gateways across Europe provided a greater number of points for European travellers to depart for New Zealand.

"Emirates also have good links into India, so there is potential for improved connections for Indian visitors," he said.

"In terms of the transtasman route, it is pleasing that Qantas and Emirates have committed to maintain at least their current levels of capacity between Australia and New Zealand."

House of Travel's commercial director Brent Thomas said the deal would mean seamless travel to a much greater range of destinations and Qantas frequent flyers would be able to use their airpoints on Emirates flights.

The deal

* Qantas and Emirates will offer 98 flights a week between Australia and Dubai.

* Benefits for frequent flyers.

* Conditions on Tasman routes which still need NZ approval.