Tigerair Australia has announced its long-awaited expansion onto international routes with its first services to Denpasar, along with a deal that will enable Virgin Australia customers to burn Velocity frequent flyer points on Tiger’s new Bali services.

Tigerair will take over Virgin’s services to Denpasar from Melbourne, Adelaide and Perth from March next year, leaving Virgin’s planes to continue flying to Bali from Sydney and Brisbane.

However, Tigerair’s A320 jets don’t have the six-hour range to fly on the longest of its new routes (Melbourne-Denpasar), so they will be operated by Virgin’s 737-800s, repainted in Tiger colours but flown by Virgin pilots.

Tiger chief executive Rob Sharp says it’s an interim arrangement that will precede a broader expansion onto international routes, most likely in the 2016-17 financial year.

The routes Tiger is actively looking at include trans-Tasman services from Australia to New Zealand leisure destinations such as Queenstown and Rotorua.

In the meantime, as part of the latest revamp, Virgin Australia will stop flying altogether to Phuket, Thailand, which it has served with five-a-week 737s from Perth after earlier axing services from Melbourne and Brisbane with its widebody 777-300ERs.

Tigerair and its parent have a strict policy of total separation between the two brands, ruling out co-operative arrangements like the codeshares which Qantas undertakes with its subsidiary Jetstar.

However, as part of today’s announcement, Tiger has relaxed the ban on interactivity with its parent by allowing Virgin customers to spend Velocity frequent flyer points to buy tickets on the new Tiger service to Bali – but not on Tiger flights to other destinations.

And there’s no relaxation of the policy that Tiger flights can’t be used to accrue Velocity points.

The new Bali services – daily from Melbourne, eight times a week from Perth and five days a week from Adelaide – will be operated by three Virgin 737-800 jets with a tight all-economy layout of 180 seats, compared with 176 seats on existing Virgin jets, with premium economy-style seating up front and in the overwing exit rows offering increased seat pitch of 86 to 99 centimetres (34 to 39 inches) per seat row.

The premium seats will cost $40 on top of the one-way economy fare from Melbourne, $32 from Adelaide and $30 from Perth. Tiger is offering in an introductory discount economy seat sale for $89 one-way (from Perth), $99 (from Adelaide) and $129 (from Melbourne) between March and June next year.

With the planes freed up by the changes in services to Bali and axing of Phuket, Virgin Australia will increase frequencies on trans-Tasman routes (Melbourne and Sydney to Christchurch and Brisbane to Auckland, Wellington, Christchurch and Dunedin) and services from Brisbane to Honiara, Solomon Islands, Nadi, Fiji, and Apia, Western Samoa.

The new services to Bali will also benefit from having Virgin’s already installed in-flight wifi, which can be used on passengers’ own devices – either free or paid, depending on the package, the airline says.

Tigerair is on track to record its first full-year profit in Australia in the current financial year, with Virgin reporting Friday that its low-cost subsidiary cut its losses from $51 million to $9 million in the first six months of this year alone.

CEO Rob Sharp says the airline is benefiting from the synergies it can use as part of the Virgin group, the introduction of airport bag drop services, roaming airport staff using iPads to speed up check-in and a massive increase in reliability, up from 75 per cent of flights arriving on-time in 2014 to 87.5 per cent in June this year, the latest month for which government figures are available.