( dpa )- State-owned Air New Zealand announced domestic fare cuts on Friday in its latest move to combat competition from Australia's Qantas Airways and Pacific Blue, a subsidiary of Briton Richard Branson's Australian airline Virgin Blue.
Air New Zealand, which is 76 per cent owned by the government, said it would cut early bird budget fares on regional routes by up to 30 per cent from February 23 in a bid to stimulate demand after expanding capacity.
The airline is also cutting 20 to 30 per cent off last minute fares on some routes.
Pacific Blue executive Adrian Hamilton- Manns said Air New Zealand's announcement was an admission that it had been charging too much for too long on domestic flights.
He said he doubted that Air New Zealand would be cutting fares if Pacific Blue had not started flying domestic flights in November.
"Inflation figures released this month showed that the cost of domestic air travel within New Zealand had fallen by nearly 5 per cent since Pacific Blue announced it was starting domestic flights," Hamilton- Manns said.
Air New Zealand chief executive Rob Fyfe said that over the past two and a half years the airline had added 35,000 seats to planes on regional routes and was now turning its attention to encouraging more Kiwis to get out and see more of their country.