The Qantas brand will be damaged by the decision to ground its fleet, Air New Zealand believes.
Passengers were left stranded after the decision to ground the fleet was made by Qantas chief executive Alan Joyce, who said he had no choice but to take drastic action after weeks of stoppages.
Joyce said the ongoing dispute between Qantas and three unions: the Australian and International Pilots Association (AIPA), the Transport Workers Union (TWU) and the Australian Licensed Aircraft Engineers Association (ALAEA) is undermining confidence in the airline.
"We're currently working hard with our strategic partners, Virgin, in order to move capacity on to the Tasman and free up some flights for them to then deploy into domestic Australia," he said.
He said it is pretty hard to tell how long the grounding of flights will last.
"We're planning over the next few days we're getting ready to make sure our customers can get to and from Australia.
"Then the second phase will be getting more capactity on the Tasman and also getting some long haul capacity to make sure those Qantas customers who are being let down can get on with their holidays."
He said it is coming into a busy period with the Melbourne Cup coming up and this will create challenges.
Qantas New Zealand Pacific General Manager Rohan Garnett told ONE News he gives "full credit to our custmoers for sticking with us throughout this" and that they are taking things "hour by hour".
Rival offers additional services
Meanwhile, Qantas' rival Virgin Australia is getting hold of every plane it can.
Virgin has been working overnight to schedule additional services to assist affected Qantas passengers.
Virgin spokeswoman Melissa Thomson says the airline will use Virgin aircraft to offer over 3,000 extra seats today between the ports of Sydney, Melbourne, Brisbane, Canberra, Karratha and Perth.
This is in addition to the 40,000 seats that Virgin has recently added to its domestic network for travel between 14 October 2011 and 31 January 2012.
Virgin has 140,000 seats available for sale on the domestic network through until Sunday 6 November 2011.
In total 108 aircraft will be grounded in 22 airports around the world.
Budget off-shoots Jetstar, Jet Asia, and Qantas freight services are not be affected.
Passengers fuming
Airline passengers left stranded in London's Heathrow Airport after Qantas grounded its fleet indefinitely are fuming.
The stranded passengers say they have been left without any assitance or any way to get back to Australia.
"There is nobody here to tell us what is going on and it seems to be impossible to get through to the phone number that Qantas is telling you to ring," Frank Riquelme from Liverpool, Sydney, told The Australian, after the grounding of the weekend's first Qantas flight from Heathrow.
"All we have had here at the airport is British Airways staff handing out a printed statement from Qantas that tells you to go online or call a phone number that doesn't answer."
A Qantas flight which was due to arrive in Auckland from Los Angeles at 09:10 has been cancelled.
One customer who has been waiting in line at Auckland International Airport for four hours told ONE News he feels like a hostage.
Another said the situation leaves a bad taste in her mouth.
"I've heard so many people say I'm never going to fly Qantas again," she said.
US Tourist Erik Welch told ONE News the passengers are not being taken care of.
"Somebody dropped the ball here...it shouldn't have gone this far."
The cancellations do not include transtasman flights which are operated by a subsidiary carrier under the Qantas brand.
Joyce also announced the lockout of all employees covered by the agreements that are currently in dispute.
The airline will offer hotel accommodation and alternative flights to those who are mid-journey and can't get home when the grounding takes effect.
And there will be refunds and ticket transfers available to passengers whose flights are cancelled.
"We're very sorry for all customers affected by the grounding. Full refunds will be available to those affected," Qantas says on its Facebook page.
Union demands
Joyce said his hand had been tipped by the impossible demands of the three unions.
"They are trashing our strategy and our brand," he said.
"They are deliberately destabilising the company and there is no end in sight."
He announced the lockout of staff involved will begin at 10pm NZ time on Monday.
"We are locking out until the unions withdraw their extreme claim and reach agreement with us," Joyce told a press conference today.
If the industrial action continued, Qantas would have no choice but to shut down its business "part by part", the chief executive said.
Australian Workers Union boss Paul Howes told the NZ Herald that the airline did not seek government intervention or use a range of provisions under the Fair Work Act that could have delivered an earlier end to the dispute.
"Make no mistake: this is an ambush on the Australian people," he said.
Joyce believes the lockout and grounding of the fleet was the only effective avenue at his disposal to bring about a solution to the dispute.
Joyce said the ball was now in the unions' court.
"They must decide just how badly they want to hurt Qantas, their members ... and the travelling public," he said.
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