Airfares to New Zealand hit near-record lows

Fares on the trans-Tasman route have reached near-record lows as the battle between airline alliance groups Qantas-Emirates and Virgin Australia-Air New Zealand intensifies.

Air New Zealand will begin flying its new Boeing 787-9 Dreamliner aircraft on the Perth to Auckland run on Friday, a month earlier than planned in a move that will raise the level of competition further. It will be the first route on which Air New Zealand flies its new fleet of Dreamliners, which will eventually total 10.

Australia's largest travel agency, Flight Centre, said return fares between Australia's east coast and Auckland were selling for as little as $330, which included taxes. 

Flight Centre has highlighted a weakening in demand for international travel since the federal budget in May, which has forced airlines to discount fares to entice travellers on routes to New Zealand and Asia.

"The trans-Tasman is one of the more competitive international routes out of Australia," a Flight Centre spokesman said.

Fares to destinations in Asia such as Phuket in Thailand, the Malaysian capital of Kuala Lumpur and Singapore are about 5 per cent cheaper than this time last year, according to Flight Centre.

The latest government traffic statistics show weak passenger loads on flights between Australia and New Zealand. Qantas filled 61 per cent of its seats on the route in June, Emirates 56 per cent, Jetstar 72 per cent, Virgin 74 per cent and Air New Zealand 78 per cent.

Emirates flies three A380 superjumbos each day between Australia's east coast and Auckland, each of which can seat 489 passengers. The Middle Eastern airline also flies a Boeing 777 plane once a day from Sydney to Christchurch.

Some of the largest increase in flights has been to the New Zealand tourist destination of Queenstown in the South Island. Jetstar will begin flying three times a week between the Gold Coast and Queenstown in December.

Virgin also plans to introduce a business-class service on all trans-Tasman routes from early next year. Air New Zealand offers business-class on its twin-aisle Boeing 777 aircraft which fly between Australia and New Zealand but not its smaller A320 planes. 

Air New Zealand's stretched version of the Dreamliner – the 787-9 – includes business and premium classes.

The trans-Tasman market has become a two-way fight between Qantas-Emirates and Virgin and its largest shareholder, Air New Zealand. Between them, the alliance groups carry about 97 per cent of passenger traffic between Australia and New Zealand.

As part of a five-year extension to Virgin's alliance with Air New Zealand, the competition regulator has required the two airlines to maintain a base level of capacity on six routes between Australia and New Zealand, including between Melbourne and Christchurch and Brisbane and Wellington.

The decision late last year brought the Virgin-Air New Zealand alliance in line with the tie-up between Qantas and Emirates on the trans-Tasman route, which was approved for five years.