New Zealand and Australia declare air fares war

An air fare price war was launched between Australia and New Zealand today after an alliance between the region’s two major airlines was banned.

Australia’s competition watchdog rejected a tie-up between Qantas Airways and Air New Zealand because it would be “highly anti-competitive”.

Today, Qantas said it would cut its round-trip fare between Sydney and New Zealand’s largest city of Auckland to $450 (€265) from €670 (€395).

Qantas said it would also cut its one-way fare to $240 (€140) to match the fare offered by Air New Zealand’s new low-cost carrier Tasman Express.

Air New Zealand almost collapsed in 2001 but was bailed out by the government, which now owns 82% of the company.

Both airlines are considering an appeal against the competition watchdog’s decision.