September 19 2014, updated 6:37am

Air NZ to ground Freedom Air

Last updated 00:00 06/09/2007

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Palmerston North hopes to attract another trans-Tasman airline after Air New Zealand said it is axing its budget Freedom Air services from the city.

After operating Freedom Air for 10 years and carrying more than four million passengers, Air NZ will end the no-frills service next March in order to attract more customers, and replace the flights with Air NZ.

Palmerston North airport manager Garry Goodman is currently talking to other airlines in Australia, and will report to an airport board meeting next week.

"We've been talking to other airlines for some time to supplement the existing Freedom service, but now we can tell them that they can pick up where Air New Zealand has left off," Mr Goodman said.

Plans to extend Palmerston North's airport runway would proceed, city councillor Gordon Cruden said.

"Indeed it increases its urgency because of the need to attract other airlines. They will fly similar Airbus 300s and Boeings 737s needing the same compliance with RESA safety requirements and assurances of a future lengthening to 2200 metres," Mr Cruden said.

Pacific Blue recently announced it would set up a low-cost domestic airline, but that would not initially include flights to Palmerston North. The airline may consider expanding to other airports in two years' time if demand was good enough.

Another planned airline, Kiwijet, would include Palmerston North in its schedule, and there was speculation that Singapore budget airline Tiger Airways was eyeing a service to New Zealand.

Air NZ had planned to continue flying to Sydney and Brisbane from Palmerston North with Qantas under a planned codeshare agreement, which regulators turned down.

However, demand did not justify a trans-Tasman operation out of the city, despite the popularity of Brisbane flights during some months, Air NZ executive Norm Thompson said.

Wellington was expected to be the main beneficiary, with Air NZ deploying extra capacity to other centres. Air NZ was also adding a service to Coolangatta, and departures from Dunedin and Hamilton.

Trans-Tasman customers had expressed a strong preference for the airline to focus on upgrading and enhancing services, Mr Thompson said.

In addition, competition had pushed down airfares, meaning there was little difference between Freedom and Air NZ fares.

No redundancies were anticipated. Affected staff were being consulted and would be offered jobs within the group.

The ending of Freedom Air services is among changes to be progressively introduced during the next 18 months.

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Others were to include a more spacious section of economy seating, new in-flight entertainment services and new food and beverage menus.

Air New Zealand would also alter the configuration on its 767 and A320 aircraft to allow more than 20 per cent of customers travelling in economy on these aircraft to enjoy more space and greater comfort.

That would see greater seat pitch created at the front of the aircraft, where frequent fliers often travelled, without affecting the pitch at the back of the aircraft, he said.

That would be done by removing a galley on the A320 aircraft and the removal of a row of economy seating on the 767.

In June, Air New Zealand announced it would spend more than $50 million equipping its A320s and 767s with individual on-demand personal entertainment screens.

- NZPA

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