A price war is underway on the Queenstown to Wellington air route, after budget airline Jetstar announced it is taking on Air New Zealand.
Jetstar is to offer a daily direct service between the centres from November this year to challenge the national carrier's daily direct flight.
Jetstar chief executive David Hall says his goal is to destroy the monopoly Air New Zealand has on lucrative domestic tourist routes and bring down the cost of flying.
He says the new flights will increase capacity into Queenstown by 11,000 seats a week.
Air New Zealand on Monday said it would match Jetstar's $79 one-way fare.
Forsyth Barr aviation analyst Rob Mercer says other airlines have been burnt by that strategy, with Pacific Blue getting out of the domestic market last year after losing millions of dollars.
However, Mr Hall says he is confident his airline's strategy will work and Jetstar is in for the long haul.
Jetstar will also run a twice-weekly Sydney to Queenstown flight from $199 one way from December, he says.