A merger, which would create the largest airline in the world, has been given the go ahead by the European Commission. Competition regulators in Europe have announced that they do not believe a tie up between US giants Continental and United would have any significant effect on airline competition in Europe.

Currently, both airlines fly to a combined total of 35 destinations within Europe. The new airline, which will retain the name United Airlines, will now have to get the approval of anti-trust bodies in the US as well as a positive vote from their respective shareholders.

The European Commission said that it is happy to give the merger clearance because it would only lead to a slight increase in the market share of both airlines. Air cargo transport would also only be affected to a limited degree. The commission added that because both airlines operate out of different US cities, they would compliment each other in terms of serving their passengers’ needs.

The new airline would control around seven percent of the world’s capacity and be valued in the region of 5.2 billion euros. When they announced the deal in May, United and Continental said that through a combination of savings and new revenues they hoped that by 2013 the new airline would generate around 1.2 billion dollars.

The merger follows the 2008 takeover of Northwest by rivals Delta Airlines. In a bid to keep up with the competition generated by Lufthansa and the merger of Air France and KLM, British Airways recently completed a tie-up with Spanish airline Iberia.