Jetstar 'could enter domestic market'

Qantas is considering using its budget arm Jetstar on the New Zealand domestic routes, potentially putting further pressure on rivals Air New Zealand and Pacific Blue, chief executive-in-waiting Alan Joyce says.

Mr Joyce runs Jetstar and will take over the top Qantas job from Geoff Dixon in November.

Rival Air New Zealand says the domestic market cannot sustain three airlines on the main trunk route long-term.

But Mr Joyce said Qantas would not be the one to leave: "The Qantas group will not be pulling out of domestic."

Qantas flies between the main centres and to Rotorua and Queenstown, largely to support its trans-Tasman network.

"It is a very competitive market. We think it is an important market for the Qantas group ... and we are always looking at better ways of operating and what is the right mix of Jetstar and Qantas in that market.

"To us, it's not a decision of whether we should be in or out, it is a decision of how we service it and that is one of the things that we are looking at."

The Tasman market also had "heat on it" and fares have been cut in a escalating price war to stimulate demand as a result of airlines increasing capacity.

Emirates would add the A380 in February, Pacific Blue was adding flights to Auckland and Thai Airways was expected to replace a direct service to Bangkok with a one-stop service via Australia.

"At the top of our list at the moment ... Jetstar is looking at expansion on the trans-Tasman as well," Mr Joyce said.

Currently Jetstar flies only to Christchurch, where it has replaced several Qantas services and opened some new ones.

The Qantas brand was consolidating its core business market, Mr Joyce said.

Air New Zealand chief executive Rob Fyfe has said that if all the extra capacity eventuates over the next nine months, the Tasman would again become a loss-maker.

Mr Joyce said he was confident Qantas would be able to retain its share of the corporate market, despite Air New Zealand spending nearly $60 million on adding seat-back entertainment to its aircraft on the route, something Qantas does not have.

Qantas would catch up when it put next generation Boeing 737-800 and potentially the 787 jets on the Tasman, replacing older models. However, there were no immediate plans, he said.

A further 30 airlines could succumb to record fuel costs in the next year, but Mr Joyce doubted there would be any significant failures in Australia or New Zealand.

- © Fairfax NZ News