Singapore Airlines has doubled its stake in Virgin Australia to nearly 20 per cent.
The airline bought shares making up 9.9 per cent of the company from Richard Branson's Virgin Group for $123 million at 48 cents a share. It now holds 19.9 per cent of Virgin Australia.
The purchase is subject to approval from the Foreign Investment Review Board.
"Our partnership with Virgin Australia has been going from strength to strength, offering a wide range of consumer benefits," Singapore Airlines chief executive Goh Choon Phong said.
"Increasing our stake in Virgin Australia is another example of Singapore Airlines' deep commitment to the important Australian market," he said.
"It also demonstrates our support for the ongoing transformation of Virgin Australia, which has created a more competitive aviation market in Australia."
Singapore Airlines acquired its original 10 per cent stake in late 2012 through an injection of funds in Virgin Australia.
The latest move makes SIA biggest shareholder, ahead of Virgin Group and Air New Zealand.
Abu Dhabi-based airline Etihad also holds a significant share, giving Virgin Australia hefty financial clout to contend domestically with Qantas.
Global airlines have been deepening ties with local carriers to access the Australian market.
Last year, Qantas and Emirates announced a major global alliance which opens up Qantas's domestic network of more than 50 destinations and nearly 5,000 flights per week to the Dubai-based airline.
Singapore Airlines is a key international competitor to Qantas.
The announcement comes a day after the competition regulator approved Virgin Australia's purchase of a 60-per cent stake in Tiger Airways Australia, despite concerns about the market becoming a duopoly.
Kimber Capital head of research Greg Fraser said Singapore Airlines wants to have a bigger say in how Virgin Australia develops.
"They (Singapore Airlines) clearly have more confidence in the way the company (Virgin Australia) is shaping up, now that they (Virgin Australia) have got Tiger in their end,” Mr Fraser said.
Air New Zealand holds a stake of about 19 per cent in Virgin Australia, and Etihad Airways has about 10 per cent.
Mr Fraser said Singapore Airlines wanted to ensure that a large amount of international travellers going between Australia and Asian destinations travel via the Singapore Airlines/Virgin Australia Alliance.
Mr Fraser said that if Virgin Australia completes the acquisition of a 60 per cent stake in Tiger Australia, Virgin Australia will be able to focus on competing with Qantas in the business travel market.
Tiger Australia will compete with Jetstar in the budget travel market.
Virgin shares were up 1 cent higher at 46.5 cents at 1.06pm.