Air New Zealand (ASX:AIZ, NZE:AIR) and Virgin Australia (ASX:VGN) applied to New Zealand's Ministry for Cities, Environment, Regions and Transport and the Australian Competition and Consumer Commission for approval to expand their codeshare partnership, aiming to strengthen trans-Tasman connectivity and broaden travel options for passengers, according to a Tuesday statement by Air New Zealand.

If approved, the agreement would provide reciprocal loyalty benefits, including points earning and redemption, lounge access, and priority services while allowing Air New Zealand customers to book single itineraries to 30 domestic destinations in Australia and Virgin Australia customers to connect to 20 destinations across New Zealand.

The proposed expansion seeks to improve connectivity, offer customers a wider choice of destinations and deliver enhanced benefits to passengers of both airlines, the airline added.

Air New Zealand's Australian shares added about 1% in recent Tuesday trade, while Virgin Australia Holdings' shares shed roughly 3%.