KEY POINTS:
The recent "open-skies" airline agreement between the United States and the European Union will affect New Zealand's key UK tourist market, according to industry commentators.
But the question remains by how much?
The UK is New Zealand's second-largest market, with 301,651 visitor arrivals in the year ending April.
Chris Lee, marketing director of Travelmood, said the open-skies agreement due to come into force in March next year would have a significant impact on the UK travel industry.
"That will lead to flight prices going through the floor," Lee said. "We're going to see huge, huge reductions."
The agreement would cut transatlantic air travel restrictions and allow European Union carriers to fly from any city in the EU to any city in the United States.
The emergence of cheaper short-haul flights in Europe had previously caused people to spend more money on shorter breaks to the potential detriment of long-haul holidays, Lee said.
"I think the open-skies [transatlantic agreement] ... could also do the same thing."
Meanwhile, South Africa was another destination New Zealand should look out for, he said.
"They've got a very active tourist board, they've got some good flight capacity which is being enhanced a lot by the Middle East carriers [and] they've got the World Cup soccer coming up in 2010," Lee said.
Goldman Sachs JBWere analyst Marcus Curley said the impact of the US-EU agreement depended on the magnitude of the change in airfares.
"There's no doubt that it will be negative, it's just a matter of whether you would spot the join," Curley said.
"I would be cautious to assume that this is going to dramatically change prospects for New Zealand, given that airfares are only a portion of holiday expenditure."
Tourism NZ chief executive George Hickton said more transatlantic competition could change pricing quite significantly but the size of the threat to New Zealand was relatively unknown.
"It's a potential threat in that it adds to the challenges we already have in that market with short-haul flying and budget airlines."
The US was not considered a competitor destination in terms of holiday experiences and NZ would never compete on airfares, Hickton said.
"It will simply mean that we've got a bit more competition for the dollar and time and we've got to make sure our marketing's as effective as possible."
However, South Africa could be much more of an issue, he added.
"Because they have some pretty good product and the perception is that they're getting safer and they're in the same time zone in one flight."
Tourism New Zealand would keep watch on South African marketing in the UK and ensure it was not outmuscled, Hickton said.
"I think what they've done is watch how we did it and start to copy."
