The Qantas Group's decision to inject Jetstar into the New Zealand domestic market is more than a mere add-on for operational purposes. It is a potentially devastating move for Air New Zealand and a harmful one for Virgin Blue/Pacific Blue. It is both bellicose and strategic on the part of Qantas. The move is full frontal attack on the New Zealand domestic market, which is only arguably large enough for two competitors and definitely not for three.
The move is strategic because this can only lead to the end game for Australasian aviation. For Air New Zealand, which relies on the domestic market for its bread and butter (representing over 60% of Group passenger numbers), Jetstar's entry will compound the damage Pacific Blue has already done to domestic yields.
Meanwhile, the risk is that an already sensitive Virgin Blue will also be swept up in the carnage. Virgin Blue yesterday revealed slumping Australian demand could trigger up to 400 job losses as it cuts hard into its capacity plans for the coming financial year (commencing in July).