Yet another budget airline prepares for NZ take-off

A christmas airfare special may be in store for New Zealand travellers as another airline enters the cut-throat transtasman market.

Australian airline Jetstar, Qantas Airways' budget carrier, has announced it will be flying to New Zealand by the end of the year.

Jetstar spokesman Simon Westaway told the Herald on Sunday details of destinations and fares wouldn't be known until August at the earliest.

However, David Russell of the Consumers Institute expects Jetstar to follow the same fare structure as similar carriers. Travellers could also expect a bargain introductory offer, he said.

Fierce competition has already enabled travellers to take advantage of special deals across the Tasman.

In January, Pacific Blue offered $1 airfares to celebrate its first birthday, and in May Freedom Air was offering a one-way $99 fare from Auckland to the Gold Coast.

Jetstar is the equivalent of Air New Zealand's budget carrier Freedom Air.

Whether it will fly from the main centres or target Freedom Air at provincial airports remains to be seen.

However, its decision to fly to New Zealand was an indication the two countries were becoming one market, said Mr Russell.

In Australia, it has kept its fares low by not allocating seats and not offering automatic baggage transfer between flights. However, seat allocation would be offered on transtasman flights, Mr Westaway said.

Air New Zealand spokesman Mark Street said the company did not want to comment on Jetstar's entry into the market, especially as it hadn't yet announced any routes or fares. He emphasised that unlike discount carriers, Air New Zealand focused on offering passengers frequency and convenience as well as good prices.

Mr Street said the airline was happy with its current market share in such a competitive market. Nonetheless, the company told investors last week it was concerned about the effects of the price war across the Tasman, with international carriers using idle time in Australia to offer cheap fares.

The company said it was only able to make money if fares were at least $189 one way - but fierce competition had pushed fares as low as $99 each way.

Jetstar faces a similar challenge as it enters one of the most highly competitive routes in the world. Ten airlines regularly fly to a variety of destinations in New Zealand and Australia.

Tony Moffatt, commercial director for travel agency House of Travel, said the airlines were releasing special deals every week to stay ahead of each other.

Despite the large number of flights already available, the airlines continue to add more. Last week, Freedom Air announced that it was increasing its services between Hamilton and Sydney to five times a week from December, and yesterday it took delivery of the first of four Airbuses which will increase its passenger carrying capacity.

Dubai-based airline Emirates has also added a new connection between Christchurch and Sydney, starting on July 16.

- Herald on Sunday