Air New Zealand said today it would spend up to $340 million on 12 new ATR72-600 aircraft for its regional fleet.
The company said it would buy seven of the new planes, with an option for an additional five.
It currently owns 11 ATR72-500s.
Chief Executive Officer Rob Fyfe said today's announcement, which was subject to contract signing, would significantly boost air service connections to regional New Zealand.
"This order potentially doubles the size of Air New Zealand's ATR fleet and will put a further two million seats into the New Zealand regional market annually. For our customers that will mean a big increase in the number of business timed seats and seriously cheap grabaseat fares we have on regional routes every day."
The first of the 68 seat ATR72-600 aircraft will be delivered to Air New Zealand in October next year followed by a second in December.
Two will arrive in 2013 and another each year for three years.
"At a time when other businesses have shown little appetite to invest significantly in assets, particularly where revenue is derived from regional New Zealand, we have not waivered in our belief in the long-term strength of the domestic economy," said Fyfe.
"Thanks to the purchase of larger aircraft and the lowering of fares we have seen regional passenger numbers increase by an average 5.6 per cent annually since 2003, resulting in our regional airlines carrying 54 per cent more passengers to 4.3 million in the year ended September.
"Today's significant capital investment also signals that we will be upping our promotion of key regional centres at home and overseas as we will need to encourage even more people to fill those two million more seats coming on stream over the next few years."
Fyfe said the new-generation ATR72-600 was the most efficient aircraft in its class and features a new cabin layout with larger overhead bins, improved seating and advanced cockpit.
Air New Zealand's ability to maintain services during inclement weather to and from destinations like Queenstown, Rotorua and Wellington will improve with the better navigation technology.
Airline Group General Manager Australasia Airline Bruce Parton said the new plane gave it the means to "up-gauge" its Q300 operated routes that would require more capacity in the coming years.
This in turn, would release Q300 aircraft to up-gauge on some Beech 1900D operated routes, enabling it to look at new "start-up" routes.
"So there is benefit in bringing in the larger turbo-props and cascading growth down throughout our regional operation," he said.
It was likely that some routes currently serviced by the smaller Q300, such as Nelson-Auckland and New Plymouth-Auckland, would see this larger turbo-prop in use.
"It is likely that the new fleet will be Auckland-based, providing us with an excellent spread of regional aircraft including bases in Christchurch, Nelson and Hamilton. This will give us a solid platform for regional growth particularly into and out of Auckland."
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