Jetstar has announced plans to withdraw from regional flying in New Zealand at the end of November.
Photo: RNZ / Cole Eastham-Farrelly
Jetstar said the proposal does not impact its New Zealand domestic and international jet services but will end regional Q300 turboprop services.
It would impact Jetstar's 130 return services a week during peak season; Auckland and Nelson, Napier, New Plymouth and Palmerston North, Nelson and Wellington.
The decision was "based on the operation continuing to be loss making combined with higher costs and a softening of the regional travel market," Jetstar chief executive Gareth Evans said.
"The New Zealand regional market is facing some headwinds, with softer demand and higher fuel costs and we don't see the outlook changing any time soon."
"We're immensely proud of what our regional team has achieved to help Kiwis see more of their country for less. Last year 25 percent of our regional customers paid less than $50 for their flight and 75 percent paid under $100.
Jetstar chief executive Gareth Evans making the announcement today. Photo: RNZ / Jordan Bond
The final flights would be on 30 November. Customers with flights booked after this date will be offered options including a full refund.
It will continue to offer up to 270 domestic jet services a week between Auckland, Wellington, Christchurch, Dunedin and Queenstown. It is also doubling services offered between Wellington and Queenstown.
"It's business as usual for the rest of our New Zealand operation," Mr Evans said.
Napier Mayor Bill Dalton said competition was good for the region and while it's not ideal, it isn't the end of the world.
Jetstar began flying in the regional centres in December 2015.
Air New Zealand is offering discounted airfares - for the same route on the same day for no more than $50 each way - to Jetstar customers affected by the Jetstar announcement.
Air New Zealand chief revenue officer Cam Wallace said the airline would commit to not increase its lowest lead-in fares on the routes affected by Jetstar's withdrawal until at least the end of 2020, subject to fuel prices remaining stable.
It will explore opportunities to add further capacity to the routes affected by the Jetstar withdrawal.
'Opportunity in a crisis'
Grant Robertson Photo: RNZ / Dom Thomas
Finance Minister Grant Robertson said it was a shame to lose airline competition in the regions, but the government won't be telling Air New Zealand not to raise its prices.
Mr Robertson was hopeful another airline would emerge.
"We've had times in the past in New Zealand where we haven't had other operators on those regional routes and we'll have to see whether another one emerges but those decisions are entirely for Air New Zealand to make," he said.
"Clearly there's an expectation from New Zealanders that there are fair prices paid, and we'll keep an eye on that."
Consumer Affairs Minister Kris Faafoi said aviation was a tough business to be in at the moment but competition was important.
"There's always an opportunity for locally-based carriers to get in there as well. In my electorate, Air New Zealand pulled out of Kāpiti Airport and Air Chathams came in, so there's always an opportunity in a crisis."
