WASHINGTON -- The government on Wednesday approved a proposal by United Airlines and US Airways to sell seats on each other's flights, coordinate schedules and offer reciprocal perks such as frequent flier miles, effective immediately.

In its decision, the Transportation Department said it gave the go-ahead to the two struggling airlines because the partnership would increase competition and benefit travelers.

"We have not yet seen evidence that the agreements will unreasonably restrict either airline's incentives and ability to compete independently or would be likely to result in collusion on fares or service levels," the decision said.

The regulators, though, said they would monitor the so-called code-sharing agreement closely and would take action against the airlines if they found the venture dampened competition.

The "code-share" term comes from the practice of putting an airline's two-letter industry code onto another's flights.

Glen Tilton, United's chief executive, said the decision was great news for the airline.

"Our customers will enjoy expanded service options and frequent-flier benefits, as well as access to each carrier's airport clubs," he said.