Jetstar opens new airpoints front against Air NZ

The arrival of Jetstar to the selected regions will bring much needed competition and help cut the cost of domestic air travel.

The airline rivalry over New Zealand skies has just been turned up another notch.

Jetstar have fired another shot at Air New Zealand by trying to prise passengers from its loyalty scheme.

Ahead of swooping into Air New Zealand's regional heartland at the end of this year the Qantas-owned airline has now sweetened its air miles programme.

Jetstar passengers can now earn Qantas Points on all the budget carrier's domestic flights across all fare types (although there are some exceptions) and join Qantas Frequent Flyer for free until the end of the year, saving $50.

This comes as Air New Zealand is putting considerable energy into revamping and expanding its own scheme, establishing relationships with high transaction value sellers of European cars and property.

Air New Zealand's Airpoints programme now has more than 1.8 million members and is growing at a rate of more than a quarter of a million members each year.

Expect more announcements from Air New Zealand on its scheme soon; it has been looking at big box retailers, telecommunications and a jewellery chain for new potential partners. Across the Tasman Air New Zealand owns about a quarter of Virgin Australia and that airline has been aggressively expanding its own air miles programme.

Airlines fight to protect their loyalty schemes for obvious reasons - they guarantee the first instinct for anyone planning a trip is to fly with them to earn or burn their points. Loyalty programmes are in the top two to three reasons for choosing to fly with a particular airline.

They can be the crown jewel of an airline. For a while during Qantas' recent slump its Frequent Flyer programme was the airlines one shining light and touted as a potential asset to sell to get the Red Roo out of a financial hole.

New Zealand already has the biggest population of Qantas Frequent Flyer members outside Australia and the airline says Qantas says the most frequent use of points is for flights and upgrades to premium cabins internationally.

They can also be used on flights operated by Qantas partners such as Emirates. So as the head of Qantas Loyalty Lesley Grant (a former Air NZ cabin crew boss) says - it means flying to Dunedin on Jetstar will earn points to contribute to flight to Denmark.

Air New Zealand enjoys critical mass with the size of its network and its loyalty scheme within this country. But just as Jetstar's expansion into the regions threatens to take a slither from the bottom line, a more attractive airpoints scheme is another niggle for this country's national carrier.