Trans-Tasman air fares hit lowest point in 20 years

An air ticket 'bloodbath' has erupted on the Tasman, with return fares between Sydney and Auckland dropping below $250, including fees and surcharges.

Prices have not been this low in at least two decades.

It comes as air fuel prices have plummeted and seat capacity has increased by at least seven per cent since August when Pacific Blue ramped up its trans-Tasman services.

Passenger demand has also been slowing, forcing airlines to stimulate an overcrowded market. Eight airlines fly the route.

Fares on Air New Zealand's website are as low as $222 for return tickets. The trick is to book one-way tickets on each of its Australian and New Zealand websites, avoiding a doubling of Australian surcharges which add markedly to the fare, especially in and out of Sydney.

The carrier is touting one-way fares from $30 before airport and security charges while Virgin Blue budget offshoot Pacific Blue is offering fares out of Sydney for $243, including taxes and surcharges and a 20kg luggage allowance. Its base fares start from $34.

Other airlines are not far behind the two carriers in pricing as capacity ramps up on the route.

Emirates stimulated the latest price war, announcing one-way fares this month between Sydney and Auckland or Christchurch of $99, plus airport taxes. The Middle East carrier will extend its Dubai to Sydney A380 double-deck service to Auckland from February 2.

Qantas budget offshoot Jetstar Airways will flying into Auckland from Australian ports at the end of April, expanding its present service into Christchurch.

Last week it reduced the price of its Brisbane or Sydney to Christchurch fare from $159 to $119. Qantas is offering fares, including surcharges, from around $360 return, and appears to be leaving the cut-throat fares to Jetstar.

The Tasman is renowned for its frequent price wars.

The chief executive of Air New Zealand, Rob Fyfe, warned when the company filed its annual results in August that proposed capacity increases on the Tasman route of seven per cent to nine per cent would "quickly turn the route into a bloodbath".