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Dunedin has joined Pacific Blue's domestic network, with the inaugural flight arriving in the city this afternoon.

The airline - the New Zealand offshoot of Australia's Virgin Blue - will operate a daily return service between Dunedin and Christchurch, connecting to Auckland or a similarly timed flight to Wellington.

Dunedin travellers have lacked competition in the skies since 2005, when Origin Pacific pulled out of the city. Pacific Blue will operate one of its bright red 737-800 planes on the route, accommodating 180 passengers.

Promotional fares start at around $60 for the Dunedin to Christchurch trip, and $100 for Dunedin to Auckland.

Pacific Blue's expansion comes 7 months after it launched domestic services in New Zealand, and is the first of a promised move "into the provinces".The low-cost low-fare airline says it's in growth mode and remains bullish about the economy. It says loadings for the new service are solid, and its expansion has created 17 new part-time positions at Dunedin International Airport.

Pacific Blue bosses says the airline's helping to grow domestic passenger numbers in New Zealand, with its low-fare approach complemented by optional "pay-for-use" services like food and drink.Dunedin becomes the southern-most destination in Virgin's worldwide network. Pacific Blue is hoping to launch more destinations this year (Invercargill is often mentioned as a possibility, along with Hamilton and Palmerston North).

The airline says it's working to secure a third 737-800 for the domestic market to help fuel further expansion in routes and daily scheduled services.