[Gerald A]

QANTAS and Air New Zealand are preparing for a "bloodbath" on the highly competitive trans-Tasman route, as they face a looming price war, other rivals increasing their flights and an economy in recession.

In a risky move for the national carrier, Air NZ has slashed fares on its most crucial route, just over a month before Virgin Blue's New Zealand-centric subsidiary, Pacific Blue, begins nine flights a week between Sydney and Auckland. The new services will add about 300,000 seats a year to the route.

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