Chile's LAN Airlines has launched the Dreamliner on its services through Auckland as looming competition on flights to South America promises to bring down fares.
LAN is using the Boeing 787-8 on its daily Santiago-Auckland-Sydney service and says it will upgrade that further in September to a larger 9-series Dreamliner which will add nearly a third more capacity ahead of more rivalry in its home region from Air New Zealand which will fly to Argentina in December.
The new LAN plane is the first Dreamliner to fly daily across the Tasman.
Patricio Aylwin, managing director Asia Pacific for LAN parent company, LATAM, said using a Dreamliner on the two-stop route from Chile had been on the airline's radar for several years.
The airline's ageing Airbus A340-300s were no longer fuel-efficient compared to the new generation of planes. LAN has had Dreamliners - made largely of lightweight carbon composite - in its fleet since the end of 2013. Promised fuel savings meant this gave the airline more flexibility to hold fares, Aylwin said.
"This is an extremely exciting milestone for us in the Pacific region."
LAN has a reputation in the travel industry for cheap fares across the Tasman but being expensive to fly on to Chile.
Aylwin said low fares to Australia were part of the airline's strategy of competing hard with carriers with much greater frequency and better schedules on the route.
"We do have a pricing point on the Tasman which makes us competitive because we don't have the frequencies others have. It is hot competition - we are the outsiders in the market."
He would not comment on whether LAN made money on the Tasman service, saying the airline looked at its Pacific route into Sydney as a whole.
The launch of its bigger Dreamliner services in September, and the start of Air New Zealand's service to Buenos Aires, would provide more seats to South America and this would put pressure to push down fares, he said.
The New Zealand outbound market to Chile was small but growing and Air New Zealand's services would boost the profile of the wider region.
"We see potential to increase that. Obviously with Air New Zealand coming in we see the potential," Aylwin said.
"It's good for the industry, there'll be much more interest. The market as a whole will grow, I have no doubt about that."
House of Travel commercial director Brent Thomas said the Dreamliner service would be a game changer for LAN and this would be good for consumers.
General manager of product at Flight Centre New Zealand Simon McKearney agreed the increase in the number of seats (from 247 to 313) in the new LAN Dreamliner and Air New Zealand's 777-200 on the Argentina route would help pull down fares.
"What you have there is a compelling offer which I think will aid pricing [which] is expensive on that route."
Grant Bradley flew from Sydney to Auckland courtesy of LAN.