Anyone flying to Australia and the Pacific on Air New Zealand from late this year will have four options of service priced accordingly, with the bottom option challenging budget airlines.

Business class seats will only be available on wide-bodied aircraft flying out of Auckland.

The airline's A320 aircraft on trans-Tasman and Pacific services will have one-class and 171 seats. But customers can chose from four options. A Seat option allows one carry on bag of 7kg, tea, coffee and water and access to some entertainment options but no new release entertainment.

A Seat Plus Bag option allows one carry on and one checked bag, tea, coffee and water and some entertainment. The Works option has a meal and drinks and a seat request.

Works Deluxe allows two priority bags, a carry on bag, a seat request, a meal and drinks, a guaranteed empty seat next to you, premium check in, lounge access and better entertainment options.

General manager short haul, Bruce Parton, said the fastest growing part of the trans-Tasman market was at the leisure market.

"Businesses really aren't flying a lot in business class. They just won't pay it," he said. A Works Deluxe airfare would be $500 to $600 cheaper than a business class airfare and the seat-only option would be "in exactly the same place" as budget airlines.

"Seat-only will appeal for children. Where there is a family going across, Mum and Dad may book The Works and the kids get booked as Seat," he said.

He said the product range announced today was world leading.

"Certainly no one has done it on an international sector," he said.

The airline was also introducing automated check in procedures similar to those currently used on domestic flights. A chip in a passport could be used to check in.

Christchurch would be the first market to receive the new product offering, with fares on sale from April 29 for travel late-August, before it goes on sale network-wide in early September with travel rolling out from late-November.

"Closer to launch time we will be revealing how much we will be slashing the cost of travel, but it would be fair to say the savings on lead-in fares would buy an extra night's accommodation for a family of four on their holiday to the Gold Coast."

The airline said it would also introduce a new way of selling airfares.

"The Tasman is one of the most fiercely competitive airline markets in the world, with eight airlines competing for the 5.8 million passengers who fly between Australia and New Zealand each year," said Mr Parton.

Air New Zealand had a market share of 2.1 million of these passengers and planned to maintain this.

Air New Zealand operates trans-Tasman 280 flights per week and 72 Pacific Island flights each week.

The announcement was welcomed by the Tourism Industry Association (TIA) and Wellington International Airport Ltd.

Wellington airport chief executive Steve Fitzgerald said the changes could be an important step in generating even more travel between New Zealand and Australia.

"The range of products will further enhance choice and competition, and Wellington Airport is very pleased with the increased capacity that will result," Mr Fitzgerald said.

Based on Air New Zealand's current schedule of services, the reconfiguration of Air New Zealand aircraft will add around 4.7% in capacity on the Tasman for Wellington.

TIA chief executive Tim Cossar said the products provided real choice for every section of the market, at the same time as providing more seats on the crucial trans-Tasman route.

"Simplifying travel into New Zealand for Australian visitors will be a significant new boost for our single most important market, especially as we emerge from recession. Australia has been critical to supporting our tourism industry through the last few difficult months and this move by Air New Zealand will help continue that trend," he said.