Budget airlines battling for skies

The gloves are off, with Australia's Pacific Blue and rival budget airline Jetstar launching new services in New Zealand and across the Tasman.

Although their agendas were different, both went to great lengths yesterday to announce a volley of cut-throat low or free launch fares and new services in a bid to reverse falling passenger numbers.

Timing by the airlines in announcing the bargain-basement fares and freebies and new services was nearly simultaneous and the promotion of their deals was intense. Jetstar launched its no-frills domestic services, replacing its parent Qantas on five destinations Auckland, Wellington, Christchurch and Queenstown and ditching the Rotorua service.

Pacific Blue announced new services on the already-crowded Tasman market from Wellington, Dunedin and Queenstown to Australia from September 1. Pacific Blue already flies across the Tasman from Christchurch.

Jetstar also flies to Australia from Christchurch and began services from Auckland to Sydney and the Gold Coast in April.

Pacific Blue, a subsidiary of Australia's Virgin Blue, announced cheap launch fares for its new ports from $259 one way from Queenstown to Sydney (two flights a week) and $189 from Dunedin to Brisbane (three flights a week) and from Wellington to Sydney (three flights a week).

Jetstar kicked off its domestic services with a giveaway of 2000 seats on flights in February and March next year during a two-hour booking window yesterday morning.

Jetstar boss Bruce Buchanan also indicated the carrier had its eye on expansion in New Zealand, once its undertakings had settled down.

That could include adding some regional routes to its stable perhaps Hamilton.

Pacific Blue has also focused on Hamilton. It will fly direct from the Waikato to Australia using a 104 seat Embraer 190, not needed in Australia because of the market downturn.

On the routes announced yesterday it will use Boeing 737-800s, five of which are under-utilised in Australia.

Some New Zealand routes will be adjusted to reduce Pacific Blue's overall capacity by 1 per cent.