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Competitive plays in New Zealand

Air New Zealand (ANZ) chief executive Rob Fyfe says he is adopting a "wait-and-see" approach to the recent announcement of a potential low-cost entrant in the domestic market. Proposed start-up Kiwijet in late April unveiled plans to launch services in December using two Boeing 737-300s.

Fronted and backed by Patrick Weil, a Florida-based aviation consultant who worked with easyJet during its start-up phase in 1995, and three other investors, Kiwijet plans to fly its 737s in a 140-seat configuration with a single fare structure, open seating and free on-board beverages. Kiwijet has expressed interest in buying JetConnect, the Qantas unit that flies within New Zealand, but says it will apply for its own operators certificate if needed.

"I take any potential competitive threat very seriously [but] there are a hell of a lot of what-ifs at the moment", Fyfe says. "As it is described it is only a couple of aircraft on existing routes with frequencies below ours and at prices that are above our lowest fares. And I've seen nothing to suggest that Qantas wants to exit the market."

ANZ itself has been reviewing its strategy for domestic services, with a variety of options being considered including a low-cost carrier operating alongside ANZ in the home market. It has also been looking at the type of products and services offered on board and ways to streamline the passenger experience at the airport.

Meanwhile, the fiercely competitive market between New Zealand and Australia across the Tasman Sea is looking healthier, even though ANZ and Qantas were prevented from codesharing on these routes late last year. "We are making money on the Tasman," says Fyfe. And even though ANZ is reducing capacity across the Tasman, which "has become a more rational market over the past 12 months", it is a volatile market that rarely stays stable for long.

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