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Qantas has cut fares on flights within New Zealand, a move analysts say is a response to Air New Zealand's decision to cut fares by up to 26 per cent last week and a drop in fuel prices.
Air New Zealand said on Friday it would drop domestic fares to entice more travellers and deflect a potential move by cut-price airline Pacific Blue to enter the market.
A Qantas spokesperson denied new special sale fares - for the Auckland-Wellington, Auckland-Christchurch and Auckland-Queenstown routes - were in response to the Air New Zealand cuts.
He said the airline "would always remain competitive".
However, Goldman Sachs transport analyst Marcus Curley said Qantas had obviously responded to the cut in Air New Zealand's lead-in fares.
"It is encouraging from the public's perspective to see fares coming down from both Air New Zealand and Qantas. However that's what you would expect in a competitive environment."
The reductions were affordable since fuel prices had come down over the past four months, he said.
Air New Zealand does not separate out its fuel surcharge, and instead incorporates the cost of fuel in an all-in-one ticket price. "What you see is a reduction in headline fares as opposed to a reduction in fuel surcharges," he said.
Air New Zealand's chief executive Rob Fyfe has said the airline would make further reductions if it had underestimated demand.
A review of prices on the airline's Tasman, Pacific Islands and long-haul routes would be completed by early March, said Fyfe.
From February 24, it will be possible to fly with Air New Zealand from Auckland to Wellington one-way for $89 and from Auckland to Christchurch for $99, a 23 per cent and 18 per cent reduction on the present lowest prices respectively.
Lower and lower
Qantas
Auckland-Wellington from $64
Auckland-Christchurch from $74
Air New Zealand
Auckland-Wellington from $89
Auckland-Christchurch from $99
