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A price war on New Zealand's main domestic airline routes is likely, with Australian budget airline Jetstar set to announce plans to join the market.
Some in the travel industry expect Jetstar to reinstate some of the off-peak services between Auckland, Wellington and Christchurch that were abandoned last month by its parent airline Qantas.
"It would be a fairly safe bet that they will go main trunk," an industry executive said in Wellington newspaper The Dominion Post today.
That would mean four airlines - Air New Zealand, Qantas, Pacific Blue and Jetstar - flying between Auckland and Christchurch.
Jetstar's staff costs are significantly lower than Qantas's and well below Air New Zealand's, giving it a price advantage.
Jetstar was not commenting on details of the announcement, expected to be released within days.
Chief executive Bruce Buchanan has repeatedly said the domestic services were high on the agenda, with a link between the airline's Christchurch and Auckland bases a "highly likely option".
Qantas is expected to continue business flights across the Tasman in the short term, but within two years the brand could disappear from New Zealand and possibly even the Tasman.
"The whole issue about the Qantas brand domestically in New Zealand must have question marks beside it," an aviation analyst said.
Air New Zealand is expected to vigorously defend its turf, with the help of its 80 per cent domination of the business market and monopoly on the regional network.
While a price war would dent Air New Zealand's profits, the real head-to-head battle is likely to be between Jetstar and Christchurch-based budget rival Pacific Blue.
The airlines hope that cheaper fares will also encourage more people to fly for leisure, not just for business.
- NZPA
