KEY POINTS:
Shares in Government-controlled Air New Zealand dived more than 6 per cent this morning on the threat of a price war when Australia's Pacific Blue enters the domestic market.
Pacific Blue, a unit of Virgin Blue, founded by flamboyant British businessman Sir Richard Branson, is due to announce details of its entry into the domestic market tomorrow.
It ran large ads in daily newspapers today announcing intentions that will put it into direct competition with Air NZ and Qantas.
Air NZ has largely had the domestic market to itself since the collapse of Nelson-based Origin Pacific a year ago, and the retrenchment of Qantas' New Zealand operations to the Wellington-Auckland route.
Air NZ shares nose-dived 14 cents to $2.00 today, wiping $147 million off the company's value. Because of its 80 per cent ownership, the drop means the Government has suffered a paper loss of $118m.
- NZPA
