Airfare wars: Price slashes between Air New Zealand and Jetstar enter second week

Air New Zealand has announced a new promotion, titled Septemperature. Photo / Brendon O'Hagan, Bloomberg News

Domestic airlines are locking heads over flight prices to get customers on board and fares are still being slashed a week into the tussle.

A price war between Jetstar and Air New Zealand kicked off a week ago when Qantas' low-cost airline unveiled the addition of Nelson, Napier, New Plymouth and Palmerston North to its regional network.

It sold 16,000 flights priced at $9 during the launch on August 31, with Air NZ responding immediately by matching the $9 fares on its 'Grabaseat' website.

The new competition between the airlines - previously restricted to Auckland, Wellington, Christchurch and Queenstown - was expected to bring air fares down throughout the country.

And it looks to be the case so far.

Both airlines are currently neck-and-neck with the new regional flight prices sitting between $35 and $49.

Jetstar is offering the cheapest deal on flights to Napier from Auckland while Air NZ has dipped its prices for other regional areas such as Queenstown to offer the lowest fares.

Air NZ has also kicked off another promotion, called Septemperature, which will see flight prices to three domestic regions plummet daily in line with temperatures at 9am.

It was launched this morning, with customers seeing $4 flights for Blenheim, $6 flights for Nelson and $3 flights from Dunedin on offer.

An Air NZ spokeswoman said the airline had also offered $9 fares to Hamilton, Rotorua, Tauranga and Invercargill last week after the centres "missed out" on the Jetstar regional network announcement.

This morning's Septemperature fares sold out in less than 30 minutes, she said.

"This financial year we will offer more than 2 million fares for $100 or less and on our grabaseat website we regularly offer ridiculously low fares."

Jetstar is hitting back by promoting its lowest every day fares from Auckland to the new regions at $49 for Nelson, Napier and Palmerston North and $45 to New Plymouth. Further specials could be in the pipeline.

Jetstar NZ spokesman Phil Boeyen said feedback about the slashed prices had been "brilliant".

The airline sold more than 20,000 fares on the regional launch day - with 16,000 at $9 - despite the website crashing for almost two hours because of increased web traffic.

Mr Boeyen said the airline was also offering a "price beat guarantee' where customers would get 10 per cent off fares if they find them for cheaper elsewhere.

There was also an opportunity to expand the regional network - but only if the first set of regions take off, he said.

"Everyone's just very happy to have a choice. They've looked at the main centres and said 'Man, why can't we have a choice' and they're really excited about that.

"It's really important to us to choose the right regions we've got to get the right ones so we can maximise the growth out of those, once we've got those running successfully...then absolutely we'll look at further opportunities."

Air New Zealand chief executive Christopher Luxon said last month he felt "really comfortable" with the airline's ability compete.

Jetstar's entry into the regional market was partly payback for his airline's entry into Australia, he said.

Air New Zealand holds a 26 per cent stake in Virgin Australia which, with the financial clout of the Kiwi airline and other carriers, was able to challenge Qantas in its lucrative domestic market.

"Qantas was quite bruised by Virgin Australia taking it on. It's a little bit of this is payback for challenging them in their home market.

"Having said that great there is choice for customers across the country and it's great there is competition," he said.

Air New Zealand spokeswoman Louise Struthers said the airline's promotion launched today was the first time the national carrier had allowed the weather to determine sale fares.

"With predictions of cooler temperatures for September, we're encouraging customers to check out the coolest places to visit ... at 9am weekdays to grab some bargains," she said.

In June, Jetstar announced it would expand into the regions and, after lobbying from regional mayors, airports and tourism promoters, the airline announced the winners on August 31.

Economic potential and the ability to support two airlines were the main criteria for choosing the destinations, to be served by five 50-seater Bombardier Q300s, with the first flights planned for this year.

Nelson-Auckland and Napier-Auckland flights would start the beginning of December while flights between New Plymouth-Auckland, Palmerston North-Auckland and Nelson-Wellington flights would follow early next year.

Cheapest one-way flight prices today:

• Auckland - Napier:Jetstar: $35 Air NZ: $49
• Auckland - Nelson:Jetstar: $45 Air NZ: $49
• Auckland - New Plymouth:Jetstar: $45 Air NZ: $45
• Auckland - Palmerston North:Jetstar: $49 Air NZ: $49
• Auckland - Wellington:Jetstar: $49 Air NZ: $49
• Auckland - Christchurch:Jetstar: $59 Air NZ: $59
• Auckland - Queenstown:Jetstar: $99 Air NZ: $79