Air New Zealand to spend $263 million on turbo-prop planes

Air New Zealand will add up to two million passenger seats a year to regional New Zealand destinations by investing up to $US270 million ($A263 million) on new ATR-600 turbo-prop planes.

The French-built ATR72-600 is the next model on from the ATR72-500, which Air New Zealand already operates on regional routes.

The national carrier has committed to seven aircraft at this stage, with options on another five. The first two are due in service by late 2012. Another pair will arrive in 2013, and one a year beyond that under the original order.

The additional five aircraft could be delivered between 2014 and 2016, as Air New Zealand seeks not only to build regional passenger numbers but also to head off potential competition on lucrative, lightly served routes to New Zealand's 27 regional airports.

The ATR craft had been chosen as best in class for efficiency and cabin interior, Air New Zealand chief executive Rob Fyfe told reporters on Wednesday.

The airline says the fleet increase is all growth, and will take the ATR fleet to as many as 23 aircraft, with the first new services likely to be between Auckland and the provincial cities of Nelson and Palmerston North.

The fleet increase will allow the airline to offer more timely schedules for businesspeople while increasing competitively priced seating to serve the growing local and international tourist appetite for flights to regional centres.

Air New Zealand carried 2.8 million passengers to regional destinations eight years ago, carried 4.3 million in the last year, and expects to grow that by two million passengers annually with the expanded fleet.

AAP