Pacific Blue's NZ operations at risk, says analyst

The arrival of Jetstar will mean tough times for Pacific Blue's NZ domestic operations, says one analyst. Photo/ Brett Phibbs

As competition intensifies between low-cost airlines, speculation is growing that Pacific Blue could quit the New Zealand domestic market within 18 months.

Last week Jetstar, the budget carrier owned by Qantas, started flying between Auckland, Christchurch, Wellington and Queenstown, replacing Qantas flights.

From September Christchurch-based Pacific Blue, a subsidiary of Virgin Blue, will be introducing new services across the Tasman from Queenstown, Wellington, Dunedin and Hamilton.

Pacific Blue has flow on main trunk routes within this country for 18 months.

The Sydney Morning Herald reported Macquarie Equities saying it was difficult to see two low-cost carriers operating within New Zealand in the longer term against government-owned Air New Zealand.

"It would not be surprising to see Pacific Blue reduce its services or exit entirely within 18 months," the broker said.

- NZPA