Australia on Thursday approved Qatar Airways buying a 25% stake in Virgin Australia from U.S. private equity firm Bain Capital, posing a challenge for national flag carrier Qantas that has long dominated Australian air routes.

Qatar Airways Ltd.’s acquisition of a 25% stake in Virgin Australia can proceed subject to enforceable conditions, Australian Treasurer Jim Chalmers said, adding the deal would improve competition in the country’s highly-concentrated aviation sector.

Australian travellers could face cheaper airfares after Qatar Airways' 25 per cent stake in Virgin Australia was approved federal government.

The Australian government on Thursday approved Qatar Airways' move to buy a 25% stake in Virgin Australia from U.S. private equity firm Bain Capital saying the deal would deliver more international flights and support jobs.

The deal will open new routes for travellers and is expected to provide a long-term pathway for Virgin Australia to operate its own long-haul flights.

Passengers and the aviation industry are expected to benefit from improved competition after a deal between Qatar Airways and Virgin Australia was approved.