The rise in oil prices is expected to boost demand for short-haul flights to Australia. Photo / Mark Mitchell

The rise in oil prices is expected to boost demand for short-haul flights to Australia. Photo / Mark Mitchell

From early next year a new plane will make its big presence felt flying the Tasman, a route one carrier says could see commercial "carnage" for airlines.

When Emirates starts operating its double-decker Airbus A380 out of Auckland from February 1, capacity on the route will grow by 360 seats a day as a bigger plane will also travel out of Christchurch.

Rocketing fuel prices and falling consumer spending power around the world have forced airlines to pull back from long-haul routes and capacity is down around 7 per cent in the fourth quarter of this year. But transtasman services have so far remained largely unscathed.

Royal Brunei has increased flights from three times a week to daily and Pacific Blue is putting on a new Auckland-Melbourne service later this year.

And some in the industry are picking travel within Australasia could benefit from the financial pressure to remain close to home.

Transtasman bookings make up 40 per cent of Flight Centre's business and product general manager Andrew Stark said this could rise.

"We have seen a drop off in long-haul travel and we have seen an increase in transtasman travel in direct correlation to the tight economy. It's only when times are going exceptionally well people tend to take extravagant holidays."

Ministry of Tourism figures show spending by Australians increased by 17 per cent in the year to March - up $249 million to $1.7 billion.

While Stark says passengers have it good for now, Air New Zealand warns of a potential bloodbath for airlines.

Shorthaul manager Bruce Parton says while capacity over the past 12 months was steady and demand was holding up, Air New Zealand was no longer seeing growth in the volume of passengers travelling on the Tasman route.

"Profitability on the Tasman deteriorates rapidly when the rate of capacity growth in the market exceeds the rate of passenger growth. With passenger numbers flattening out, any significant increase in the level of market capacity will cause a decline in the profit of all airlines on the route," he told the Business Herald last month.

"Put simply - the Tasman market is on the cusp of potentially turning into a bloodbath. Some carriers look like they are ramping up capacity."

There were also murmurings of some new entrants looking to take up rights to fly beyond Australia.

Beyond rights or Fifth Freedom rights refer to the right of an airline from one country to land in a second country, to then pick up passengers and fly on to a third country. Parton said the end result could be "carnage" but Air New Zealand would not be one of the casualties.