The Government has given the green light to an agreement between Qantas and Emirates, opening the way to shared services between the airlines on transtasman routes.
Transport Minister Gerry Brownlee said the "Master Coordination Agreement" would bring benefits to airline passengers, exporters and the tourism sector.
Travel agents have been frustrated at the delay in approving the deal which got the green light in Australia six weeks ago.
The agreement will allow the airlines to better co-ordinate their services to New Zealand destinations and allow passengers to benefit from each of the carriers' frequent flyer schemes. It also opens up the possibility of new routes being developed with Auckland-Adelaide and Auckland-Perth possibilities.
Air New Zealand fought parts of the the agreement, fearing stronger competition on the route, although others in the tourism sector have backed the deal.
Brownlee said Qantas and Emirates would be able to co-operate on passenger and air freight for an initial period of five years.
Exporters and travellers would benefit from strengthened connections with Emirates' international network, including 30 points in Europe, as well as the growing Middle East region and Africa.
"The Master Coordination Agreement sets the stage for Qantas and Emirates to share services across the Tasman, allowing Emirates to offer Queenstown and Wellington as tourism destinations accessible on their network," Mr Brownlee said.
Transtasman competition would be maintained through existing carriers on the route and the threat of entry by new carriers, he said.
Under conditions imposed by the Australian Competition and Consumer Commission, airlines are required to maintain at least their pre-alliance capacity, subject to a review to consider whether increases in the minimum required capacity are warranted.
"Competition between strong home carriers is important for the Australasian aviation market, and this alliance will ensure competition is retained, while opening the door to additional benefits for New Zealand," said Mr Brownlee.
