Jetstar plans to start flights to regional destinations later this year in what will be a major shake-up for domestic air travel.

The low cost carrier will use a fleet of five 50-seat Bombardier Q300 turbo-prop aircraft to fly to at least four regional centres initially.

Those cities being considered include Hamilton, Rotorua, New Plymouth, Napier and Palmerston North in the North Island and Nelson and Invercargill in the South Island.

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The new flights will break Air New Zealand's stranglehold on flying large aircraft to regional centres. Air New Zealand shares plunged by close to 10 per cent this morning after the Jetstar move into the regions was tipped by the Business Herald.

Air New Zealand pulled out of three regional towns earlier this year and is closing its Eagle Air operation while putting bigger aircraft in to the bigger cities. The airline made those moves and restructured regional fares after complaints they were too high.

Jetstar made the announcement in Auckland today with Prime Minister and tourism minister John Key.

The airline said its new flights - due to start in December - would bring "low fares competition to monopoly domestic routes around the country."

Jeststar is owned by Qantas whose chief executive Alan Joyce said the time was right to bring Jetstar's fares to the regions.

"When Jetstar brought low fares to New Zealand's key routes six years ago it completely transformed the market in terms of value and now we'll do the same for regional New Zealand," he said.

There had been calls for more choice and lower fares on regional routes," Joyce said.

"We're answering that call by launching Jetstar flights to regional New Zealand, making air travel more affordable for people who live outside the main centres and boosting tourism and the economies of these areas."

The new regional destinations would connect to the broader Qantas Group network, including both Qantas and Jetstar flying across the Tasman.

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Jetstar Group chief executive Jayne Hrdlicka, said the Jetstar on-time performance had improved during the past two years and was well placed for regional expansion.

"When we first started operations in New Zealand, domestic fares across the country dropped by around 40 per cent, and we expect fares will drop considerably on the regional routes where we'll operate."

Jetstar managers would visit regional centres during the next two months to meet with airports, local government, and business, travel and tourism representatives to determine the first regional destinations.

Jetstar, which is fully owned by Qantas, launched Trans-Tasman flights in 2005 and established domestic operations in New Zealand in June 2009. The low cost carrier's fleet of nine Airbus A320 aircraft operate up to up to 240 domestic and 100 international flights a week.

Jetstar has crew bases in Auckland and Christchurch and already employs more than 400 pilots, cabin crew, engineers and ground crew around the country.

The Jetstar-branded regional services will be operated by QantasLink.

Under the arrangement, Qantas-owned Eastern Australia Airlines - which has operated Q300 aircraft in Australia for QantasLink for over 15 years - will manage the aircraft operations.

Air New Zealand also operates the Bombardier Q300s. The airline's shares were trading down 9.8 per cent at $2.39 early this afternoon.

Prime Minister and airport chiefs welcome the move

"Today's commitment is more good news for New Zealand and for the regions," Key said.

"This will create jobs, mean cheaper fares and more choice for New Zealanders and our international visitors, and will provide a welcome boost to regional economies."

The country's regions were making an important contribution to the economy through tourism, niche-manufacturing, winemaking, forestry, agriculture and horticulture and the extra air would help connect them, he said.

Auckland Airport chief executive Adrian Littlewood said the announcement would bring benefits to regional travellers.

"The addition of Jetstar to the regional market is great news for travellers as it means
more seats, better prices and increased connectivity on regional services."

Christchurch Airport chief executive Malcolm Johns said the additional airline servicing for the country's regional centres was excellent news.

"Connectivity is vital to the growth of regional economies. Additional flights will make it easier to move passengers, visitors and goods to and from these centres, creating jobs and economic growth."

"This enables visitors - both domestic and international - to get off the main trunk line more easily and explore the excellent attractions our regions have to offer, again providing economic benefits."

Jetstar in New Zealand

First flights:

2005, transtasman flights launched (Sydney-Christchurch), 2009; domestic flights launched

Fleet:

NZ-based fleet is nine Airbus A320 180-seat aircraft

Domestic routes:

250 flights per week between Auckland and Wellington, Christchurch, Dunedin, Queenstown

International routes:

Up to 100 transtasman flights per week

Staff:

More than 400 pilots, cabin crew, ground crew, engineers and support staff in New Zealand

Domestic market share:

Based on Available Seat Kilometres (ASKs): 20.7% share (end June 2014)

Based on passenger numbers: Around 17%.

Domestic passengers carried since 2009:

7.6 million (end June 2014), about 1.7 million passengers a year

Ownership:

Jetstar NZ is part of the Jetstar Group which includes Jetstar Australia & NZ, Jetstar Asia (Singapore), Jetstar Japan, Jetstar Domestic On-time Performance

2015:

90% monthly average to date

2014:

90% monthly average

2013:

88% monthly average