On August 23, Virgin Blue Airlines and its three year old New Zealand subsidiary Pacific Blue announced major plans for a new domestic airline for New Zealand with NZD$39* fares on sale for flights commencing in November 2007. Initially the carrier will fly on New Zealand's key trunk routes Auckland-Wellington, Auckland-Christchurch and Wellington-Christchurch from November 15, 2007^.

The decision to enter the New Zealand domestic market comes in the wake of strong support and lobbying from the New Zealand community for Pacific Blue to bring its service style and competitive fares to internal New Zealand flights in the same way it has done on the trans-Tasman and South Pacific routes.

Virgin Blue Group of Airlines Chief Executive, Brett Godfrey, said, "The decision was not taken lightly as it is a major investment and a long term commitment to keeping the 'air fair' in New Zealand. The time is right to bring some much needed competition to the existing duopolistic market and we are excited to be opening up new travel opportunities for both the people of New Zealand as well as inbound tourists."

Brett Godfrey continued, "When Richard Branson visited New Zealand in January this year to celebrate Pacific Blue's third birthday, he promised that domestic services were something of interest to us under the right circumstances and at the right time. We are confident the circumstances are now right and there is room for competition and an obvious need for market stimulation. Pacific Blue is well positioned to give the existing players a good run for their money, particularly on the monopolistic Wellington-Christchurch route."

Virgin Group Chairman, Sir Richard Branson said, "I am absolutely delighted to announce that Pacific Blue will soon be shaking up the New Zealand domestic market and bringing its unmistakable fun, flair and affordability to travel within New Zealand. I enjoyed a wonderful trip to New Zealand earlier this year, where I saw first hand the great enthusiasm and support for Pacific Blue. I am thrilled that we can further enhance our commitment to the local market with the launch of our domestic operations. We look forward to Pacific Blue spreading its wings and bringing long term domestic bliss, perhaps not for the competition, but certainly for locals and visitors travelling within New Zealand."

The airline will take delivery of two Boeing 737-800 aircraft to join the Pacific Blue fleet and operate both international and domestic New Zealand routes. The routes are tailored to suit the needs of the market in terms of frequency and schedule:

Auckland-Wellington

Five direct daily return flights from November 15, 2007. A special sale fare has been launched of NZ$39* one way on the Internet. The sale fare is available now until September 16, 2007, or until sold out and is for travel from November 15, 2007, through February 29, 2008. Fair fares will start from NZ$69 one way on the net, 22% lower than the existing fares available on the same route.

Auckland-Christchurch

Two direct daily return flights from November 15, 2007. A special sale fare has been launched of NZ$39* one way on the Internet. The sale fare is available now until September 16, 2007, or until sold out and is for travel from November 15, 2007, through February 29, 2008. Fair fares will start from NZ$79 one way on the net, 30% lower than the existing fares available on the same route.

Wellington-Christchurch

Three direct daily return flights from November 15, 2007. A special sale fare has been launched of NZ$39* one way on the Internet. The sale fare is available now until September 16, 2007, or until sold out and is for travel from November 15, 2007, through February 29, 2008. Fair fares will start from NZ$69 one way on the net, 12% lower than the existing fares available on the same route.

To ensure maximum benefit for Guests travelling for pleasure as well as business, the internal flights will complement Pacific Blue's existing international services, providing convenient connections from within New Zealand to Australia, Samoa, Tonga and the Cook Islands.

Adrian Hamilton-Manns, General Manager Commercial, said, "The people of New Zealand have supported Pacific Blue in its quest to bring true low fares, genuine competition and fun and flair to trans-Tasman travel and that very support has given us the motivation to bring the same product and affordability to the domestic market where it is much needed.

"It is no secret that the existing domestic duopoly results in higher fares and half-hearted competition and we very much look forward to challenging that and championing affordability for local travel."

Domestic flights are now on sale and can be booked via the website at www.flypacificblue.com or by contacting a travel agent. Members of the Velocity Loyalty program will also be able to earn and redeem points when they fly domestically in New Zealand.

Pacific Blue plans to double its staff numbers over the next three years as it ramps up domestic operations. New Zealanders interested in joining the dynamic Pacific Blue team in a range of roles can email pacificblue.jobs@flypacificblue.com.

^ Subject to regulatory approval.
* All fares are one-way for flights booked on the internet. Seats are limited and fares may not be available on all flights or during peak periods. On sale until September 16, 2007, or until sold out for travel from November 15, 2007, through February 29, 2008.