Key Points:

Air New Zealand is offering a half-price companion deal for flights to Australia in another move to attract passengers wanting cheap travel as the low-cost market heats up.

The offer, available until tomorrow night and restricted to flights on Tuesdays through to Thursdays, allows a passenger booking an economy fare online to any of the airline's Australian destinations to get a second fare on the same flight for half price.

The idea is not new - Aircalin has had a similar deal on the market this year for flights to Noumea. But, following a number of other one-off, low price deals floated by Air NZ, the new companion fare appears to confirm a continuing strategy by the airline to meet the challenge of Pacific Blue, which entered the New Zealand market last month, and possibly Qantas' Jetstar.

It also indicates that to meet this competition Air NZ is unlikely to depend solely on the no-frills zone it plans to introduce in economy class for domestic and transtasman services. With availability restricted to mid-week flights, the new ploy is typical of previous deals in having the additional benefit for Air NZ of filling otherwise empty seats.

But Air NZ's plans are not restricted to anticipating low-cost competition.

Chief executive Rob Fyfe said last week that the airline had been seeking the views of its customers on a variety of issues. Seat pitch (the amount of space between rows of seats) appears to have been the subject of some adverse comment, especially from those paying higher fares.

Fyfe is aware of complaints about space, but he likens seat space to real estate - he says if you want more space you should be prepared to pay for it. But under current arrangements, where customers paying even the cheapest fares can freely book their seats on-line, there can be no guarantee that those booking fully flexible fares will have much choice as to where they are seated.

However, the announcement last week that the new forward zone of economy class planned for domestic and transtasman services will have a superior seat pitch, as well as free snacks and beverages on some routes, and will be aimed particularly at frequent flyers and business travellers, indicates that Air NZ recognises the need to offer more than flexibility of flights to passengers paying often considerably higher fares.

By incorporating both kinds of accommodation on the B737's operating domestic routes, Air NZ has avoided problems that would have arisen had it been decided to opt for a two-airline response. With two airlines, Air NZ could not have approached, let alone maintained, the current frequency of jet services without acquiring additional aircraft which, cost aside, are in short supply.

Air NZ plans to introduce the new arrangements "by mid next year". As last week's announcement was mainly limited to discussing the two-in-one concept, there would appear to be a number of practical and marketing issues to be decided and implemented before the newly configured aircraft take off.

* David Stone is an independent aviation commentator and consultant.