Air New Zealand shares lost almost 10% in value yesterday before confirmation Qantas-owned Jetstar is at least doubling its number of domestic routes.
Before Jetstar's 2pm announcement, Air New Zealand shares fell by 10% to $2.38, their lowest since last November.
They ended the day at $2.40.
Jetstar flights to regional destinations, beginning in December, will be a major shake-up for domestic air travel, breaking up Air New Zealand's stranglehold on flying large aircraft to regional centres.
Air New Zealand pulled out of three regional towns earlier this year and is closing its Eagle Air operation while putting bigger aircraft in to the larger cities.
The airline made those moves and restructured regional fares after complaints they were too high.
Prime Minister John Key, also Tourism Minister, and Qantas chief executive Alan Joyce made the joint announcement that Jetstar was expanding its domestic network around regional New Zealand.
Jetstar runs five main trunk domestic routes within New Zealand, servicing Auckland, Wellington, Christchurch, Dunedin and Queenstown, and plans to add four more centres initially, which could include Hamilton, Rotorua, New Plymouth, Napier, Palmerston North, Nelson or Invercargill.
Mr Key said Jetstar's commitment was good news for New Zealand and the regions.
''This will create jobs, mean cheaper fares and more choice for New Zealanders and our international visitors, and will provide a welcome boost to regional economies,'' Mr Key said in a statement.
Jetstar said its new flights would bring ''low fares competition to monopoly domestic routes around the country''.
The national carrier holds about 80% of the domestic market, and recently came under fire after it signalled plans to scale back local routes that were not profitable enough.
At the same time, Air New Zealand has been expanding its international coverage with several code-sharing agreements, most recently announcing a tie-up with Air India.
- Additional reporting: The New Zealand Herald/BusinessDesk
