Travellers to benefit from new domestic air competition

Jetstar Air NZ tailsKiwi travellers wanting to take advantage of their own backyard could see a prolonged golden period for travel ahead. That is the view of the tourism industry that has welcomed price cuts offered by the two main airlines serving New Zealand's regions, Air New Zealand and Jetstar, a subsidiary of Australia's Qantas Airways.

On Monday Air New Zealand joined Jetstar in a price war for the regions, in offering cheap fares. Jetstar's $9 special fares were on new routes to Nelson, Napier, Palmerston North and New Plymouth.

One tourism boss said it was possible the country would experience a golden period for travel ahead, while another said New Zealand had probably never seen this level of activity in new airline services.

However there was a warning that cheaper air tickets would only remain as long as fuel prices remained low. Aviation fuel like other commodities has weakened during the last year.

One aviation website has called 2015 a year when everyone can make money given the fuel price slide. Certainly some airlines are doing well.

Earlier this month Air New Zealand announced a record annual net profit of $327 million. Chief executive Christopher Luxon said lower fuel prices and more seats would lead to cheaper flights. The airline would offer more than two million domestic fares for less than $100 over the next year, Luxon said at the profit announcement.

Tourism Industry Association New Zealand chief executive Chris Roberts said there was no reason, apart from changes to fuel, that cheaper flight ticket offers should not last for Kiwis with Jetstar in for the long haul on its low budget approach.

"Certainly there is an expectation (ticket prices) will come down, and allowing for any other external factors such as fuel prices, remain down," Roberts said.

"Certainly the signs are from Jetstar and the model they run, that they run a low cost service. Air New Zealand has welcomed competition and says it's able to respond so I think there will be more cheap fares available across both airlines for the travelling public."

Christchurch and Canterbury Tourism (CCT) spokeswoman Caroline Blanchfield said it could be a golden period ahead for domestic travellers, and international tourists would also be able to pop around New Zealand more easily. Business travellers would also benefit.

"We've (CCT) got a focus on this domestic travel and we think the more Kiwis moving around their own country the better it is," Blanchfield said.

"The old saying is 'don't leave home till you've seen the country' ... rather than jump on a plane and go to Australia. But there are so many things you can do in."

Blanchfield said she had just spent two days on New Zealand domestic activities like jetboating and quad-biking while hosting a group of professional conference organisers on what sights and venues were available in the South Island. Those organisers in turn could bring extra business tourism into centres like Christchurch for the benefit of the regional economy.

The potential for a longer period of reduced prices came after a period of "expensive" tickets on some routes. "People only buy what they can afford ... so any competition is healthy."

That lower prices could last was being demonstrated by Air New Zealand's long running grabaseat deals, Blanchfield said.

Roberts said the airlines would have to be careful not to get into a price war situation. When Qantas and Virgin Australia had competed vigorously on some routes across the Tasman in 2013 and 2014 both airlines had seen "heavy losses" within their regional operations.

"That market's now settled down and there is still good competition and reasonable fares available ... (but) they're not killing themselves."

Towns such as Invercargill that had missed out on Jetstar's New Zealand regional expansion into centres like Napier and Nelson, should not give up the fight, and keep building a case why a new service would be patronised, Roberts said.

"We've seen incredible growth (for consumers) in the last six months. It's not only Jetstar, there's other airlines that have expanded to take over the routes Air New Zealand is dropping. (Also) there's returning airlines like Origin, new airlines like Kiwi, we've probably never seen this level of activity."

Jetstar chief executive David Hall said Jetstar would continue to look for opportunities within other regions, but would not give a timeframe for any further new services. "The ones we've chosen this time around, and I say our initial launch, have very much been ones we believe that we can grow very quickly, can stimulate with low fares."

 - Stuff