In 1981 a small airline was founded in Wellington called Air Albatross, starting with a Cessna 402 between Wellington and Blenheim and Nelson, it challenged the dominance of Air New Zealand, at a time when competition between airlines domestically was highly regulated. That would shortly change when the Muldoon Government liberalised domestic air competition.
Air Albatross started operation under the highly regulated market, whereby it had to not only prove it was fit to operate an airline, but that there was underlying demand not being met by incumbents. This rule effectively protected Air New Zealand (and a handful of other airlines on routes Air New Zealand, and its predecessor, National Airways Corporation (NAC) did not wish to operate).
The story of Air Albatross is well and truly written in the blog 3rd Level New Zealand which I will not attempt to replicate. It is interesting to me, from a public policy perspective, about the tortuous conditions new entrants to the airline industry had to accept, from capacity to frequency to airfares, before such rules were scrapped two years later.
Below is an article from the Dominion in 1981 (undated) about the airline's expansion.
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