Air NZ slashes domestic fares by up to 43 per cent

From Monday, Air New Zealand airfares will drop by as much as 43 per cent - in a bid to stimulate domestic travel. Photo / Air New Zealand

Air New Zealand is slashing its domestic fares and cutting waiting times for regional travellers.

From Monday, airfares will drop by an average of 10 per cent - and as much as 43 per cent - in a bid to stimulate domestic travel.

The airline is also reducing its three-fare structure to two - Smart Saver and Flexi Plus.

Yesterday's announcement by chief executive Rob Fyfe is the first of several initiatives the company plans to roll out over the next 12 months.

Customers can expect similar changes to transtasman and long-haul routes.

Regional services will benefit most, with Smart Saver fares introduced on all routes. Frequent flyers will be able to drop off and pick up their bags at the aircraft.

Fares for jet routes, reduced a few months ago, are unchanged.

The fare reductions come despite signs of a recovery in domestic passenger numbers.

While across the airline, passenger numbers fell last month, figures out yesterday show the number of domestic passengers rose to 764,000, up 1.5 per cent on September last year.

Mr Fyfe said the biggest challenge for a business such as Air New Zealand was being able to adapt.

"We see the opportunity to now stimulate the demand we see re-emerging in the marketplace," he said.

The arrival of Jet Star to the New Zealand market had created a lot of noise and had been a great benefit to the customer, Mr Fyfe said.

Air New Zealand has about 80 per cent of the overall domestic market, the bulk of the lucrative business market, and dominates almost completely on regional routes.

Business clients will notice the biggest difference in service.

"Flexibility is worth a lot to a business customer because time is money," Mr Fyfe said.

"At the low end of the market fares are already rock bottom."

He considered the three-player domestic market relatively unstable.

"Two's company, three's a crowd. Certainly one of the competitors is finding it very challenging in the market at the moment when you look at their load factors.

"I guess it's kind of 'watch this space' at the moment."

Bruce Parton, group general manager of shorthaul, said cheaper Smart Saver fares would result in more tourists visiting regional New Zealand.

Jetstar - which competes with Air New Zealand on main-trunk routes - said it would re-assess its own fares.

"In any competitive market we continue to respond to any evolving changes," said spokesman Simon Westaway, "and this includes a continual review of our fare levels."

REGIONAL FARES

Auckland – Palmerston North

SMART SAVER
Old: $84
New: $79 (-6%)

FLEXI
Old: $234
New: $179 (-24%)

Christchurch – Rotorua

SMART SAVER
Old: $113
New: $99 (-12%)

FLEXI
Old: $370
New: $259 (-30%)

Wellington – Queenstown

SMART SAVER
Old: $116
New: $99 (-15%)

FLEXI
Old: $461
New: $269 (-42%)

Christchurch – Napier

SMART SAVER
Old: $128
New: $99 (-23%)

FLEXI
Old: $405
New: $229 (-43%)

Invercargill – Wellington

SMART SAVER
Old: $116
New: $99 (-15%)

FLEXI
Old: $365
New: $249 (-32%)

- additional reporting by Kara Segedin