Airfare wars: No sign of slowing down

The new competition between the airlines resulted in air fares dropping across the country. Photo / Brendon O'Hagan, Bloomberg News

A price war being waged between New Zealand's two main airlines has resulted in a "a low fares bonanza" that appears set to continue into next year.

Jetstar and Air New Zealand have been locking heads over domestic fares since the low-cost airline added Nelson, Napier, New Plymouth and Palmerston North to its domestic network.

It sold 16,000 flights priced at $9 during the launch on August 31.

Air NZ responded immediately by matching the $9 fares on its Grabaseat website.

The new competition between the airlines - previously restricted to Auckland, Wellington, Christchurch and Queenstown - resulted in air fares dropping across the country.

And a month on, the cheap deals show no sign of abating.

Price checks on both airlines' websites show domestic one-way flights starting from between $35 and $89.

Qantas-owned Jetstar is offering the cheapest deals from Auckland to New Plymouth and Auckland to Palmerston North for just $35.

Air NZ has matched its budget competitor on $49 Auckland to Wellington flights.

A Jetstar spokesman said Kiwi domestic travellers were enjoying "a low fares bonanza" thanks its regional expansion.

"Services are continuing to sell well, particularly prior to Christmas," he said.

In the last financial year, more than 70 per cent Jetstar's domestic customers in New Zealand paid under $100 for their flight.

"We're very focused on playing our own game and growing the markets that we serve, helping more people to fly more often for less," the spokesman added.

Air NZ said investment in 30 jet and turboprop aircraft over the past five years had led to an increase in the number of regional seats it offers from some 10.4 million to about 11.6 million.

"This will grow further in [2016 financial year] as we deliver more capacity growth in domestic New Zealand," a spokeswoman said.

"This means more cheap seats than ever before for Kiwis.

"We have delivered reduced lead in fares to every one of the 22 domestic ports we operate to over the past six months or so and it is great to see customers snapping up our cheap seats."

Air NZ said it expected to deliver more than two million fares under $100 on its domestic network overall in the 2016 financial year.

Air New Zealand chief executive Christopher Luxon said last month he felt "really comfortable" with the airline's ability compete.

In June, Jetstar announced it would expand into the regions and, after lobbying from regional mayors, airports and tourism promoters, the airline announced the winners on August 31.

Economic potential and the ability to support two airlines were the main criteria for choosing the destinations, to be served by five 50-seater Bombardier Q300s, with the first flights planned for this year.

Nelson-Auckland and Napier-Auckland flights would start the beginning of December while flights between New Plymouth-Auckland, Palmerston North-Auckland and Nelson-Wellington flights would follow early next year.

Cheapest one-way flight prices today

• Auckland - Napier: Jetstar: $39 Air NZ: $49
• Auckland - Nelson: Jetstar: $45 Air NZ: $59
• Auckland - New Plymouth: Jetstar: $35 Air NZ: $59
• Auckland - Palmerston North: Jetstar: $35 Air NZ: $69
• Auckland - Wellington: Jetstar: $49 Air NZ: $49
• Auckland - Christchurch: Jetstar: $45 Air NZ: $59
• Auckland - Queenstown: Jetstar: $49 Air NZ: $89