Virgin Australia has ploughed $8 million into Skywest Airlines amid hopes the pair can expand their services to regional areas.

The deal effectively gives Virgin a 10 per cent stake in Skywest, which plans to use the money to tap into opportunities in the growing regional market.

As well as servicing towns such as Port Macquarie in northern NSW and Emerald in central Queensland, Skywest and Virgin transport so-called fly-in fly-out miners to various mines around Australia.

“This investment highlights the confidence that Virgin Australia has in the Skywest business and our ability to tap into future growth opportunities in the Australian regional market,” Skywest executive chairman Jeff Chatfield said in a statement on Tuesday.

Virgin entered into a 10-year strategic alliance with the Western Australia-based Skywest Airlines in January 2011 to enable the airline to fly to regional areas.

The four ATR aircraft in the Australian Regional Airline Network (ARAN) are decked out in Virgin’s distinctive red livery but operated by Skywest.

Virgin hopes to triple the number of aircraft used on the ARAN routes to 12 by end of the 2013 financial year.

“We have also recently received draft final approval from the ACCC (Australian Competition and Consumer Commission) to provide an integrated offering with Skywest to corporate customers so that we can cater to increased demand from the resource industry,” Virgin Australia’s chief financial officer Sankar Narayan said.

“The investment announced today will further cement this relationship.”

The deal involves an $8 million debt instrument, which Virgin can convert into ordinary shares at price of 45 cents a share.

The instrument matures in April 2015 and pays interest of 7.5 per cent annually.

Skywest’s shares closed 1.5 cents higher at 37 cents while Virgin Australia was steady at 42 cents.