The Minister of Transport Mark Gosche has scotched a suggestion that British owned airline Virgin Blue could benefit from the new open skies agreement between New Zealand and Australia.

The Evening Post yesterday incorrectly reported that Virgin Blue, currently running internal flights in Australia, could operate trans-Tasman services as a result of the new agreement.

Mr Gosche said the agreement, signed by himself and Australian Deputy Prime Minister John Anderson last week, applied only to New Zealand and Australian airlines.

"The agreement requires that "effective control" of these airlines be vested in nationals of the country concerned."

"While Virgin Blue is operating in Australia, it is owned and controlled by British interests and therefore could not take advantage of the new agreement."