By Himanshi Akhand and Rishav Chatterjee

(Reuters) -Australia's competition watchdog on Tuesday backed a planned alliance between Virgin Australia and Qatar Airways, saying it would provide air travellers with improved services and products.

The Australian Competition and Consumer Commission's (ACCC) draft determination comes after it gave its interim approval to Virgin Australia in November to market and sell 28 weekly scheduled return flights between Doha and Brisbane, Melbourne, Perth and Sydney.

The flights would use Qatar Airways aircraft and crew in an arrangement known as "wet leasing", and start as early as June.

"We consider that the proposed cooperative conduct would likely result in several public benefits including providing enhanced products and services for air travellers which would include increased choice of international flights, with additional connectivity, convenience and loyalty program benefits," ACCC Commissioner Anna Brakey said in a statement.

Virgin Australia is the biggest domestic rival to Qantas Airways, which has a partnership with Dubai-based Emirates and has an arrangement with Finnair to operate flights between Sydney, Bangkok and Singapore.

Qatar Airways is still awaiting government approval for its purchase of a 25% stake in Virgin Australia from the U.S. private equity firm Bain Capital.

The ACCC is now seeking feedback on its draft determination before making a final decision by March or April, the regulator said.

"The ACCC seems content with the Virgin-Qatar alliance and the resulting increased ticket options will likely be a welcome development for Australian consumers also," Tim Waterer, market analyst at KCM Trade wrote in an emailed response.

"Whether the alliance is as warmly received by aviation competitors (... such as Qantas) is another matter."

Qantas previously lobbied the government against Qatar Airways ultimately unsuccessful bid to fly additional services into Australia.

Qantas shares were trading 0.4% lower.

Virgin Australia welcomed the ACCC's decision, noting the flights were currently on sale. "Today’s ACCC announcement confirms their support for these services," the carrier said.

Qatar Airways and Qantas did not immediately respond to requests for comment.

(Reporting by Himanshi Akhand and Rishav Chatterjee in Bengaluru; Editing by Jamie Freed and Kate Mayberry)