Virgin will wage airfare war in New Zealand

23 August 2007

New Zealand travellers are being promised a price war as Australian budget carrier Virgin Blue prepares a long-awaited assault on the domestic air market, promising to bring 'affordable fares' and 'competition' to the New Zealand market.

The Australian airline co-founded by British tycoon Sir Richard Branson is launching in true Branson style, with a big publicity splash.

A newspaper advertising campaign started by its subsidiary, the trans-Tasman Pacific Blue, promises the chance "to be a jetsetter on a backpacker's budget". The development has drawn a swift reaction from Air New Zealand, which has vowed to match Virgin Blue's fares.

However, Air NZ will not say whether it will follow the Qantas example by setting up a low-cost subsidiary to take on Virgin Blue.

Australian aviation analysts say Virgin Blue's entry into the Australian market and the setting up of Qantas low-cost subsidiary Jetstar had led to a 20 per cent reduction in domestic airfares between 2002 and 2004. Air NZ has already dropped domestic fares by up to 26 per cent in January, and has been matched on the limited domestic routes Quantas operates in New Zealand.

But expectedly, travel agents are delighted by Virgin Blue's proposed entry to the market. They feel it will be a terrific boost for New Zealand travellers and tourism, increasing competition and creating more flight availability. Virgin's Australian and Pacific routes will also become more accessible to New Zealanders.