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Leg room on Pacific Blue and Air New Zealand flights between Auckland and the capital are similar but Air New Zealand has just unveiled its new two-class system.
Pacific Blue offers passengers in the front of the plane 79cm of seat-pitch while passengers in the back get 76cm.
Seat pitch is the term used in the airline industry which measures the distance from the front of one seat to the front of the seat behind.
While Air New Zealand offers just over 78cm it is re-installing a two-class system on domestic flights as it moves to meet the challenge from budget airline Pacific Blue.
The national carrier plans to divide its fleet of 737 aircraft into premium and economy seating.
The move effectively recreates a business class at the front - something Air New Zealand phased out on domestic flights in 2002.
Passengers in the front section will get more leg room - a seat pitch of up to 90cm - and free food and drinks on some flights.
Those at the back of the plane will lose a few cm - down to a 75cm seat pitch and get a budget service - similar to what all passengers now get.
But Air New Zealand isn't planning to create special business class fares.
The premium seats would be used to reward frequent flyers and those passengers who paid the full price for tickets, said chief executive Rob Fyfe.
Those who booked low-cost non-flexi fares would be down the back.
"By mid 2008 our fleet of 17 737s will begin being transformed into a fleet of 32 aircraft from a customer perspective," he said.
Premium ticket holders and frequent flyers will also be offered complimentary valet parking and and access to Koru Lounge, Fyfe said.
Forsyth Barr aviation analyst Rob Mercer said the move made sense. Air New Zealand already effectively had a budget airline and this move would allow it to make the most of the wide range of pricing, he said.
The carrier also planned to compete head-on with Pacific Blue's low fares, Fyfe said.
The number of international and domestic fares available on the Grab A Seat website would be increased. "We'll also build substantially on one-off campaigns - such as buy one get one free child fares," he said.
People should also expect to see significantly simplified fare structure for domestic fares and changes in the way Air Points were awarded to make the scheme more rewarding for regular domestic travellers. Full details would be outlined at the annual meeting in September, Fyfe said.
- with EDWARD GAY