The budget Australian airline, Jetstar, has announced its much awaited entry into the New Zealand market, and it has lured thousands of customers by selling $1 fares for a two hour period on Tuesday afternoon.
Jetstar will take over in June from its parent company, Qantas, on the main trunk routes only and claims that it won't be beaten on price.
The move will be sure to tighten up an already competitive domestic market.
There had been widespread speculation the Qantas subsidiary would become the fourth airline trawling New Zealand's domestic routes, along with Air New Zealand, Qantas and Pacific Blue.
Jetstar confirmed on Tuesday it will fly between Auckland, Wellington, Christchurch and Queenstown, subject to regulatory approval.
"Jetstar's expansion into domestic flying within New Zealand is a further significant growth milestone to become the Asia Pacific region's leading low fares airline," Jetstar's CEO Bruce Buchanan said in a statement.
Buchanan said Jetstar's entry in to the domestic New Zealand aviation market would result in up to 250 direct jobs.
It will also up the stakes for existing airlines: Jetstar's Price Beat Guarantee means it will beat other competitiors' fares by 10% for any bookings at a similar date or time.
"We'll beat any fare by 10%, seriously, we won't be undercut on price. I make this commitment to the New Zealand market today that we will not be beaten on price," says Buchanan.
The airline, which was launched in Australia five years ago, already operates a transtasman service into Christchurch. This service is expected to grow to 42 weekly return trips with the introduction of Auckland operations from April 28.
This may further toughen what Air New Zealand recently described as a transtasman price war, a route which is currently flown by airlines including New Zealand's national carrier, Jetstar, Qantas, Pacific Blue and Emirates.
Some predict Pacific Blue could be the biggest casualty out of a price war.
"The danger for them is that they can get caught in the middle, and there'll be a pincer movement between two battling, fairly aggressive airlines," says Steve Creedy, Australian Aviation Writer.
However Air New Zealand isn't phased by the competition.
"Bringing in Jetstar means they'll have a low frequency, no service offering in the market and we don't think it'll be successful," says Bruce Parton, Air NZ Short Haul Manager.
With the introduction of Jetstar, parent company Qantas will drop its weekend flights from Wellington to Brisbane and increase flights to and from Auckland.
The subsidiary will replace existing Qantas domestic services, and the change means Qantas will no longer offer services to Rotorua.
Jetstar will begin its services in New Zealand on June 10 and will offer one-way domestic prices for as little as $29.
Qantas says group employment levels will increase, but there will be an impact on Qantas jobs in Christchurch and Wellington.
"There will be some opportunities for Qantas and Jetconnect [another subsidiary] employees to take up positions with Jetstar. For those who do not, we will offer appropriate separation packages and support," Qantas Group chief executive Alan Joyce said.
Meanwhile, Jetstar has apologised to customers who could'nt get through to buy flights on Tuesday.
Spokesman Simon Westaway says they have added additional server capacity and expanded the bandwidth of servers in anticipation of more site visitors.
But he says the response has been unprecedented, and at one point 60,000 individual users were trying to buy a fare simultaneously.