Outlook: Domestic Australia airline capacity truce; NZ prepares for new entry on regional routes

Reducing capacity in Australia is less a strategic decision than it is overdue common sense. Qantas and Virgin Australia appear finally to have settled into a more stable capacity approach, with growth largely a pivot of capacity away from Western Australia and back into the east coast as the commodities slowdown hits demand. A taste of profit for both carriers should head off the temptation for further scuffles.

With Australia more or less stable and international now back into expansion mode, the Qantas Group now looks set to take on Air New Zealand's domestic market with the expansion of Jetstar into regional services. While using idle assets to make a play at Air New Zealand's monopoly, the move is likely to trigger an animated response - indeed, promotional fares have already been matched by the Kiwi incumbent and Air New Zealand is questioning the competition law implications.

Fiji Airways continues its quiet expansion in the South Pacific in the meantime while also looking to broaden its long haul markets into emerging inbound tourism markets such as China, Japan and Singapore. But the carrier is about to welcome its third CEO in three years and the shift back into expansion will require a steady hand to maintain the ruthless cost focus employed by previous CEO Stefan Pichler and prior, Dave Pflieger.