KEY POINTS:
A price war is expected on transtasman routes after Air New Zealand slashed the cost of flights from Auckland to Sydney and Melbourne.
Despite soaring oil prices, the national carrier will today announce fares of $249 to Sydney and $199 to Melbourne, both down from $373.
Chief executive Rob Fyfe told the Herald on Sunday the new fares were not short-term specials and expected rivals Qantas and Pacific Blue to attempt to match the deal.
To cover the $26,000 fuel bill for a one-way flight to Sydney, Fyfe said the planes had to be 80 per cent full. The new low prices were designed to encourage people to take weekend breaks across the ditch.
"At the moment there are more seats than passengers in the transtasman market," said Fyfe.
"We need to fill up the aircraft to cover costs and encourage people to fly in a soft economy. A lot of airlines are cutting costs. But to fill the aircraft we have to have the best product and value for money."
Air New Zealand has spent almost $60 million refurbishing the 767 and A320 aircraft, commonly used on transtasman routes. Crews are working 24/7 to fit the planes with individual in-flight entertainment systems with more than 450 hours of movies, TV, music and games.
Koru Club members will be able to book seats at the front of economy class with two to five extra inches of legroom at no extra cost.
Fyfe visited the Air New Zealand engineering hangar at Auckland Airport on Friday to inspect work on one of the 767s.
The first of the airline's upgraded aircraft is scheduled to roll out next weekend.
YEAR-ROUND FARES
AUCKLAND TO MELBOURNE:
Air New Zealand (old) - $373
Air New Zealand (new) - $199
Qantas - $373
Pacific Blue - $239
AUCKLAND TO SYDNEY:
Air New Zealand (old) - $373
Air New Zealand (new) - $249
Pacific Blue - $299
Qantas - $373
Standard one-way fares from early October, when new Air NZ prices come into effect.
