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Air New Zealand has announced large cuts to its domestic fares.
The airline said today that domestic pricing would drop by up to 26 per cent from January 24 for travel from February 24.
Chief Executive Officer Rob Fyfe says today's announcement was expected to generate demand for travel on the Air New Zealand domestic network.
"We are committed to growing our business and we can only achieve that by stimulating demand."
The company has come under flak for not cutting fares in the wake of big fuel price drops.
Mr Fyfe said the company had been working on its strategy for three months.
"Today's announcement is a clear signal that Air New Zealand is taking a more fundamental and deeper approach to its business."
The cheapest non-sale one-way fares between Auckland and Wellington will drop from $115 to $89 and between Christchurch and Wellington from $93 to $79.
Mr Fyfe said its "grab a seat" initiative, launched last year was even more heavily discounted than the fares announced today, although they were "typically for flights that are further out in duration".
"(In) our domestic market, the population is relatively static so the challenge for us if we're going to grow our business - which is very much our focus - is trying to convince people that they can use air travel as a means of travel in substitution for other forms of travel."
House of Travel's retail director Brent Thomas said it is encouraging to see the benefit of the airline's operational costs dropping is passed onto the consumer.
"This is a sensible move by Air New Zealand, which will benefit both domestic and inbound tourism. Given that Qantas's recent $5 reduction in fuel surcharges only applies to customers based in Australia, Air New Zealand's lower fares will put pressure on Qantas to match them. It all comes down to being a great boon for travellers."
Mr Thomas said House of Travel will follow any further developments closely.
"We will be watching with interest to see how this progresses."
Examples Of Air NZ's domestic fare cuts (effective for travel from February 24):
Auckland-Wellington was $115 now $89
Auckland-Christchurch was $121 now $99
Christchurch-Wellington was $93 now $79
Auckland-Nelson was $128 now $99
Nelson-Palmerston North was $121 now $89
Tauranga-Wellington was $121 now $99
Christchurch-Invercargill was $104 now $89
Nelson-Wellington was $79 now $69
- NZPA
