By KARYN SCHERER
The travel industry is bracing for another round of fierce price-cutting in the face of growing competition from Internet-based travel services.
The official launch yesterday of a new Internet-based travel company has already sparked a price war, with transtasman fares briefly slashed to less than $200 return.
While the offer, which applied to both Air New Zealand and Qantas flights, was a one-off promotion, major players are predicting further bargains for travellers this year as more companies set up Internet-based services.
Intense competition between rival travel companies had already seen return fares between Auckland and Sydney slashed to as little as $189.
The Flight Centre sold 300 tickets at the bargain-basement price at the weekend, while Internet-based travel company Travel.co.nz sold 100 tickets at $199 each in just over an hour yesterday before halting the promotion.
While Travel.co.nz promises further one-off bargains, its competitor is also talking tough, saying it will better its rival's offers.
Air New Zealand says it is unconcerned by the new company's promise of a 3 per cent discount on any Air NZ domestic fare.
In what is believed to be an unprecedented move in the industry, the new player is offering the discount on top of any existing discount by the airline. Customers must book their entire fare over the Internet without phoning for help.
Travel.co.nz says it is able to offer the discount because its costs are much lower than those of a traditional travel agency.
It admits it has also come to an arrangement with Air NZ that makes the deal possible.
Managing director Greg Southcombe said the company was not offering a similar discount on Ansett New Zealand fares as it was unable to come to an arrangement with Ansett.
"It's disappointing, but I can understand they are going through some fairly major changes themselves. We did point out they weren't going to look so great in comparison to their competition, but they chose not to participate."
Both Air NZ and Qantas quietly introduced their own online booking services last year, although neither is yet offering a discount for Internet sales.
Air New Zealand's site has been plagued with technical problems, and it is understood few travellers are using the service. While Ansett NZ also has a Website, it does not offer online booking.
The latest moves come as many travel agencies are struggling with reduced profits.
The Travel Agents' Association estimates that a fifth of the country's 800 travel agents left the industry last year after airlines cut their commissions on both transtasman and domestic fares.
However, it believes predictions that the Internet will devastate the industry have been exaggerated.
The association's chief executive, Peter Lowry, told the New Zealand Herald last year that he believed there was still a place for agents to handle more complicated bookings.
RELATED LINKS
Travel.co.nz
Price war on travel fuelled by Net rivals
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