Pacific Blue's decision to stop flying domestic routes in this country is good news for Qantas and even better news for Air NZ, Moody's Investor Services says.

Pacific Blue will cease all domestic flights in New Zealand from October 18, and redeploy aircraft to cover routes within and from Australia. Its exit would ease what had been cut-rate competition, and would support the other two carriers' profitability, Moody's said.

Pacific Blue's departure would boost domestic load factors - the percentage of occupied seats per flight, and yields, the revenue per passenger seat - at the remaining two airlines.

The shift of resources by parent airline Virgin Blue reinforced its strategy to attack Qantas' position in the Australian business flyer market. As a result, what Qantas gained within New Zealand through its subsidiary Jetstar, it may lose in Australia, Moody's said.

"While Jetstar will almost certainly profit from developments in New Zealand, Virgin's move to go after Qantas in the Australian carrier's home base has a less certain outcome. We see the developments as a likely net benefit for Qantas."