It will certainly lead to lower prices in the short term... Air NZ is already responding with temporary $28 fares to certain JQ domestic destinations. Check Grab a Seat and see for yourself.
But, it will only last until the market settles. And then, until one of them dies. Fact of the matter is, even our main trunk route cannot realistically support more than 2 airlines indefinitely but have them all be profitable on the route, with reasonable fares. Something has to give, and it will probably be one of the airlines.
NZ cannot support so many airlines - QF Jetconnect has slowly killed off its network and this finishes it entirely. Jetstar replaces some but not all of that network. Origin Pacific is dead. That leaves Air NZ and Pac Blue - one of whom is a government supported monopoly carrier and the other who is new to the domestic game.
You cannot seriously only do trunk routes and expect to stay around long in an oversaturated market. You need regionals to survive - and even then, Koru will kill you eventually.
Media reaction has been plain ridiculous. Leading story on the radio and the 6 o clock bulletins, plus God only knows how much internet coverage.
Will be nice to see a change from Jitconnict and their "schedule", but JQ is just lipstick on a pig. Not expecting it to be much better to be honest.