01/08/09, 03:20:05 UTC

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Air NZ to answer competition

tvnz.co.nz

Kiwi travellers, enjoying some of the most competitive airfares ever, are likely to see the fare war hotting up even more this week.

Air New Zealand is expected to respond to the arrival of Pacific Blue by announcing a new range of domestic and transtasman fares.

It has been a bun fight for New Zealand airfares on the internet during the past week and the battle for customers is now set to get even bigger.

"The competition's here and that's great for the consumer," says Paul Yeo of the New Zealand Travel Agents Association.

Over the last couple of years, domestic airfares have actually increased, going up more than the consumer price index.

But the arrival of Pacific Blue last week saw one-way fares on the main trunk routes introduced at $39.

On Tuesday, Air New Zealand will announce its annual profit which is expected to reach $185 million, double last year's, and with it the likelihood of some major changes to challenge its competition.

"Competition is not something new to us and certainly something we are prepared to stand up to and certainly make sure that we continue to look after our customers," says Norm Thompson of Air New Zealand.

Yeo says the consumer is going to do very well with Pacific Blue, Air New Zealand and Qantas all fighting for business on the main trunk route.

Air New Zealand has enjoyed major growth since its $885 million rescue by the government five years ago.

Its bargain priced Grab-a-Seat, for example, attracted 120,000 passengers in the first year.

Now it is poised to make some more passenger attracting announcements.

It is uncertain whether New Zealand airfares will ever rival some of the cut price European deals. Some in the industry doubt whether airlines in NZ can sustain bargain priced airfares.

But Air New Zealand, at least, says it can sustain low fares long term.

 Printable Version  | published Aug 27, 2007