The competition watchdog is moving to block future co-operation between Virgin Australia and Alliance Aviation on fly-in fly-out (FIFO) services – a major reversal of its earlier position on the matter.

The Australian Competition and Consumer Commission (ACCC) permitted the pair to “cooperate, coordinate and jointly bid” for FIFO contracts in 2017 but, in an interim decision published on Friday, said it would not allow a five-year extension to the deal as it could “eliminate competition” in this market.