Air New Zealand's decision to buy 15 new ATR72-600 aircraft will result in lower regional airfares. Air New Zealand chief executive Christopher Luxon said the new 68-seat planes would replace the airline's 11 older ATR72-500s.
The purchase would increase Air New Zealand's total ATR fleet by four to 29, adding an additional 600,000 seats into regional New Zealand each year.
Luxon said to fill those seats Air New Zealand would need to stimulate demand in the regions by lowering prices and driving tourism through events.
"The bottom line is it's going to be a very good deal for customers," Luxon said.
At list prices the new aircraft are collectively valued at US$375 million (NZ$569m).
In 2012 the airline announced it would buy 14 ATR72-600 aircraft - seven have been delivered with the remaining seven due to join the fleet by mid-2016.
The additional 15 aircraft would begin arriving from late 2016.
Air New Zealand also operates 10 19-seat Beech 1900D and 23 50-seat Bombardier Q300 aircraft.
It has been flying ATR aircraft since 1995 and the ATR72-600 is the third model it had flown, Luxon said.
"They're just perfectly designed for New Zealand."
The company would sell its ATR72-500 fleet, Luxon said.
In April Air New Zealand made major cuts to its regional network, ending services to Kaitaia, Whakatane and Westport. Whangarei to Wellington, Taupo to Wellington and Palmerston North to Nelson routes were also scrapped, with Hamilton to Auckland ending in February.
The routes, which were served by Beech aircraft, were losing $1 million a month.
As a result of the cuts Air New Zealand would be looking to sell its Beech fleet.
Luxon said the airline would not be revisiting those regions with ATRs.
"The structural economics of those towns and those regions means that we have committed that we will not be going back into those towns."
On routes which were previously serviced with Beech aircraft but were now serviced with a Q300 Air New Zealand had achieved a lower cost per seat, resulting in a 15 per cent fare reduction, Luxon said.
"We've already had several towns make that transition."
Air New Zealand shares closed up 4 cents on Thursday at $2.84.
ATR chief executive Patrick de Castelbajac said the ATR-600 delivered good economics.
It also featured improvements for passengers including overhead compartments which held 30 per cent more luggage than the ATR-500s.
Cabin noise had also been reduced by improving the synchronisation of the twin propellers resulting in less vibrations, he said.
The other big difference was in the cockpit, which de Castelbajac said described as one of the most modern in aviation.
Avionic improvements allowed the aircraft to perform a range of approaches which could save on fuel, he said.
Prime Minister John key, who was at the announcement at Air New Zealand's Engineering and Maintenance base at Auckland Airport, said tourism in New Zealand was booming with about 3 million tourists visiting each year.
The new ATRs would benefit regional New Zealand because more international and domestic tourists would be willing to fly to the regions with increased flight frequency and more affordable fares, he said.
Last updated 18:27, November 5 2015