KEY POINTS:
Air New Zealand says Pacific Blue's low airfares will not make it any more competitive in most fare categories.
This afternoon Air New Zealand moved to lower lead-in year-round fares on the main trunk routes and Group General Manager Short Haul Airlines Norm Thompson said the company would
not be beaten on price.
Air New Zealand's year-round lead-in fares are now the same as Pacific Blue's and Air New Zealand's Flexi Saver and Fully Flexi fares are unchanged.
"Air New Zealand has been at the forefront of ridiculously low fares through initiatives like grabaseat, which has seen fares as low as $1 on key routes like Auckland-Wellington and Christchurch-Dunedin over the past couple of months," Mr Thompson said.
"Kiwis have really embraced our drive to make air travel more affordable than ever, with the number of people we have flown around New Zealand increasing from 5.5 million in the 2002 financial year to 7.7 million in the 2007 financial year."
Pacific Blue this morning launched with a headline short-term offering of $39 special fares on main trunk routes.
Flights will lift off from November 15, the airline said today as detail was put on the well-signalled move, which puts Pacific Blue into direct competition with Air New Zealand and Qantas.
Initially the carrier will fly on key trunk routes: Auckland-Wellington, Auckland-Christchurch and Wellington-Christchurch.
But flights could be extended to regional centres later if there is demand.
There will be five direct daily return flights from November 15, the airline said.
The $39 fare is a special sale fare, one-way, purchased on the internet.
It is available from now until September 16 - or until sold, and is for travel from November 15 to February 29, 2008.
Other fares will start from $59 one-way on the internet, which Pacific Blue said was 22 per cent lower than exisiting fares available on the same route.
Virgin Blue Group of Airlines chief executive Brett Godfrey predicted Air New Zealand fares would drop to Pacific Blue levels almost immediately.
He said no decision had been taken yet on expanding to other centres but added: "If we are supported by the New Zealand public, we would have to have rocks in our heads not to do more."
Mr Thompson said Air New Zealand's advantages over its new rival went beyond price points.
"Our frequency on the main trunk routes on which we will compete is far superior due to the fact that we have 14 Boeing 737s in our domestic fleet and are about to take delivery of a further two, compared with Pacific Blues two aircraft."
News of Pacific Blue's entry into the domestic market has wiped 14 per cent off the value of Air New Zealand shares, the national airline 80 per cent owned by the Government.
However, the shares rebounded 2c to $2.02 when the market opened today.
Godfrey said the decision was not taken lightly.
"It is a major investment and a long term commitment to keeping the 'air fair' in New Zealand," he told a press conference.
ROUTE AND PRICE COMPARISON ON PACIFIC BLUE AND AIR NZ
AKL-WLG Year Round Lead-in fares : Flexi Saver : Fully Flexi
Pacific Blue $69 : $329 : $359
Air NZ $69 : $184 : $279
Comparison $0 : -$145 : -$80
AKL-CHC Lead-in : Flexi Saver : Fully Flexi
Pacific Blue $79 : $349 : $389
Air NZ $79 : $204 : $332
Comparison $0 : -$145 : -$57
CHC-WLG Lead-in : Flexi Saver : Fully Flexi
Pacific Blue $59 : $259 : $279
Air NZ $59 : $154 : $222
Comparison $0 : -$105 : -$57
*Effective September 1
- NZPA, MIKE HOULAHAN, NZ HERALD STAFF