Steve Hart: Tasman's battle of the brands begins

COMMENT

I was wrong. There, I'll be the first to admit it. I said we needed more competition in the air to Australia and predicted Virgin Blue would start services from here in December.

Now we know they will launch on February 1 next year. And its introductory fare, which will run for about two months, will start from a fully-inclusive $281 return to Brisbane - an absolute steal.

The company's entry comes a few months later than expected - but who's complaining? The only downside is that the airline, which will be known as Pacific Blue in New Zealand, will start by flying in and out of Christchurch. But details of their domestic services won't be too far away and other destinations in Australia will follow quickly.

Flight Centre's managing director Graeme Moore says Pacific Blue's entry is "great news for all New Zealanders".

His only concern, he says, is how long these sorts of deals will last. "We believe they should be here to stay," he said.

Will Pacific Blue's introductory fares (advertised as $99 one-way plus taxes and levies) prompt Air NZ to meet the market or will it sit tight and ride out the special next year?

In this game of high-flying cat and mouse, knee-jerk reactions should not be encouraged. At a certain point the price becomes almost immaterial as the airline with the best customer service, flexibility, inflight service and most convenient schedules will get the bums on seats.

Because Pacific Blue is part of Sir Richard Branson's Virgin family there is probably a lot of goodwill from potential customers. They see the brand as sexy, modern, forward thinking and fun.

Air New Zealand, in my mind, has a totally different feeling, one that perhaps doesn't match its new "value-based" image.

Perhaps the company's subsidiary Freedom Air is better placed to go head-to-head with Pacific Blue in a battle of the brands.

Virgin Blue's chief executive Brett Godfrey says there is no reason why New Zealanders should not benefit from the same type of competition seen in Australia.

"We are glad to see New Zealanders already getting the benefit of real competition instead of being subject to a cosy duopoly," he said.

Fine words, but after all the launch publicity has died down Pacific Blue says it will charge from a fully-inclusive $461 return on the Christchurch-Brisbane service. Air NZ's best price on this route starts from $499.

However, Pacific Blue has given itself a big advantage over the incumbent as it has chosen to launch from possibly the cheapest airport in the country, a place where it already has its aircraft serviced.

Air NZ says its market share on the Tasman run will drop below 30 per cent as a result of increased competition. But it doesn't have to be that way.

With any business there comes a point where cost-cutting affects profitability. The airline needs to increase its market share but it won't do it with some of the confusing advertising it is using. It costs nothing to build goodwill and that is what the firm needs most of all.

The company should consider the route it's following because there are still people around who would like a decent meal on a flight, a good seat and extra comforts. Or are we going to become a no-frills, bargain-bin country when it comes to air travel?