Grant Bradley: Air NZ will fight Pacific Blue tooth and nail

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Aviation reporter Grant Bradley examines what today's entry of Pacific Blue means to domestic travellers.

Today's launch party was the easy bit for Pacific Blue.

The guests turned up, the band played, there were balloons - it was a good time. With the airline's ownership links to corporate party animal Richard Branson that wasn't a surprise.

Years of tyre kicking around the New Zealand domestic market and seven months of concerted work to get the domestic airline up and running was where the real work was done.

And when the honeymoon is over it could get tough again in a market overwhelmingly dominated by Air NZ. Pacific Blue has 10 flights a day along the main trunk between Auckland, Wellington and Christchurch - Air New Zealand has more than 50.

So while thousands of fares as low as $9, sleek new planes, and the relentlessly jaunty cabin crew will make a splash for Pacific Blue, Air NZ has put its trust in size and renewed attention to service.

With its scale it can deliver a fair sprinkling of $1 grabaseat fares, but most importantly its frequency gives it an advantage which can't be beaten without putting on more planes.

Air NZ can cultivate the part of the market where the money is made - up the front for full fare travellers, mainly travelling on business.

Rather than take on the newcomer in a full scale price war, it's the top end of the market that the airline is aiming to please with bigger seats, better access to lounges, priority parking.

Qantas runs 13 services a day up and down the main trunk and, like Air New Zealand, has decided to target business travellers with revamped planes, lounges and goodies inflight.

So what can passengers expect during the next year?

A very public battle for hearts, minds and bookings. Pacific Blue is not holding back, today referring to the existing market as "characterised by lacklustre competition and monopolistic or duopolistic suppliers."

Air New Zealand points out it was offering cut rate grabaseat fares 18 months ago. The airline, which is 76 per cent owned by the New Zealand taxpayer, also asks why passengers would rather line the pockets of foreign shareholders (Toll Holdings Ltd and Virgin Group own Pacific Blue's parent, Virgin Blue in Australia).

There will be more single figure fares - Air NZ is avoiding an all-out war but they and Pacific Blue will engage in high profile skirmishes where limited ticket prices plunge.

The big winners are business travellers with Air NZ and Qantas rushing to restore full services

Pacific Blue flies only the main trunk - look for Air NZ to take better care of the regions with more services.

Air New Zealand, as it has to many other rivals who have come and gone, has said "bring it on" and plans to enter into the spirit of the day with ground staff in Auckland delivering a mass challenge to Pacific Blue's arrival in the city.

A long-term party pooper is fuel prices. A lot depends how well airlines have hedged against soaring aviation gas prices, but there comes a point when reality hits.

Ominously, United Airlines is considering mothballing 100 aircraft in America and other big carriers are thinking about doing the same if fuel prices continue to skyrocket.

Both Air NZ and Virgin are involved in biofuel projects and travellers have got to hope the alternatives work ,or otherwise the cheap air fare party might just end sooner than they want.

Vote in today's poll on the battle for NZ's airways.

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