The cost of flights to the United States could drop by up to 40 per cent after V Australia and Dubai's Emirates announced a trans-Tasman code share agreement.
The move would put further pressure on Air New Zealand's key Auckland to Los Angeles route.
V Australia is owned by Virgin Blue, which flies on the Tasman as Pacific Blue.
The venture announced yesterday takes effect from October 25. Passengers will fly Emirates from Auckland or Christchurch to Sydney, to connect with a V Australia flight to Los Angeles.
Virgin Blue chief executive Brett Godfrey said fares from New Zealand would be up to 40 per cent cheaper than existing fares from Auckland to Los Angeles.
Air New Zealand's cheapest one-way fare for October 25 was $1508.40.
House of Travel retail director Brent Thomas said there had already been strong demand for V Australia's service from New Zealand since it launched in February.
"When they first came out with the $899 deal, we sold it by the hundreds," Mr Thomas said.
That had been followed up by other promotional campaigns.
About 90,000 Kiwis travel to the United States every year.
If the fare for a flight to Los Angeles via Australia was cheap enough, people were prepared to take it, Mr Thomas said.
Many leisure travellers already took one-stop flights to the United States via the Pacific Islands or Hawaii, which was usually cheaper than a direct flight from Auckland.
An Australian stopover added another option, Mr Thomas said.
The extra competition also meant there were more of the cheaper seats available.
A Pacific Blue spokesman said the tran-Tasman code-share fares were available only to passengers travelling on to Los Angeles and did not affect existing Pacific Blue services. When V Australia launched on the Pacific route it sparked a price war with Qantas.
- © Fairfax NZ News