Qantas Airways has advised shareholders in Hazelton Airlines not to accept Ansett's rival bid until they receive further notice from Qantas.
Ansett, a subsidiary of Air New Zealand, upped its offer to $A1.35 ($1.74) a share from 90c on Tuesday, and extended the offer deadline to January 13.
The bid from Ansett,
which already owns 21.7 per cent of Hazelton, topped Qantas' $A1.20-a-share offer.
Qantas has a relevant interest of 20 per cent in Hazelton.
Shares in Hazelton, which have rallied sharply since the bidding war began, closed at a record $A1.50, up 4c, valuing it at $A25.5 million.