Jetstar has announced it will axe all regional flights from December 1.
The budget airline is citing high fuel costs and a softened market for ongoing losses on the turboprop routes, which currently operate 130 flights a week.
But it insists its jet services to the main centres - providing more than 80 percent of its revenue - are here to stay.
Jetstar chief executive Gareth Evans says those who've booked flights to the regions from December onwards will be reimbursed, and Air New Zealand will offer them some special rates.
But he says he's disappointed it had to happen so close to Christmas.
Jetstar has been running the regional routes for four years, and the company says last year 25 percent of regional customers paid less than $50 for their flight and 75 percent paid under $100.
But loyal customers at Auckland's domestic terminal say they could be feeling the pinch come Christmas.
Shareholding Minister responsible for Air New Zealand Grant Robertson says he expects Air NZ prices to remain fair and reasonable, and he won't be speaking to the national carrier about the near-monopoly it now has.
He says he hopes a new competitor can come on board.
Gareth Evans says all 70 affected pilots and cabin crew will be offered jobs either with Qantas or Jetstar, meaning 20 of them will have to take a job in Australia.
There are third party grounds crew operating in the regions, whose futures are not so secure.
Self-appointed 'champion of the regions' Shane Jones says he will ask the government to reconsider his idea of a contestable fund to help airlines breaking into the regions.