MELBOURNE, Australia (AP) — Australia's competition regulator on Tuesday approved the takeover by Virgin Australia of budget rival Tiger Airways Australia.

The Australian Competition and Consumer Commission said it will not oppose the transaction because it is unlikely to substantially reduce competition in the domestic aviation market. Commission chairman Rod Sims said in a statement that "Tiger Australia would be highly unlikely to remain in the local market if the proposed acquisition didn't proceed."

The proposed acquisition of a 60 percent stake in Tiger for 35 million Australian dollars ($36 million) still requires approval from Australia's Foreign Investment Review Board.

The commission noted Tiger Australia's poor financial and operational performance. During its six years in Australia, Tiger Australia had never made an operating profit, and its current losses were large.

Sims said Virgin Australia, the country's second-largest airlines, could now pursue its objective of transforming Tiger Australia into an effective competitor to rival low-cost operator Jetstar, a subsidiary of Australia's largest airline Qantas Airways.

Virgin Australia chief executive Jon Borghetti said the commission's approval was an important step toward completing the acquisition that would create an opportunity for strong competition in the budget travel segment.