Major cuts to Air New Zealand's regional network will see Whakatane scrapped from the airline's services come April 2015.

In an announcement today, Air NZ chief executive Christopher Luxon says Whakatane is one of three casualties in the regional shake-up, citing the small number of regional routes where customer demand cannot sustain larger 50-seat aircraft as the reason.

An Air NZ flight. Photo: File.

Whangarei to Wellington, Taupo to Wellington, Palmerston North to Nelson and Hamilton to Auckland flights will also be scrapped from February 2016.

Christopher says since the beginning of this year Air NZ has been looking at how to address the challenges of the poor operating economics of its 19-seat fleet while at the same time leveraging the significant economies of scale available from its 50 and 68-seat fleets.

'The 19-seat aircraft is the smallest in the Air New Zealand fleet,” he says, 'but has the highest cost per seat to operate because the fixed costs of operation are distributed across fewer passengers.

The national carrier says it has been losing $1 million a month on routes served by 19-seat Beech 1900D aircraft over the last two years – the equivalent of $26 per one way passenger journey.

Built in 1974, Whakatane Airport's only scheduled passenger flights are from Air NZ, operated by Eagle Airways. It also houses a flight school, agricultural aircraft and commercial helicopter operations.

Christopher says Whakatane customers will be able to access services from Tauranga and Rotorua, with both having direct services to Auckland, Wellington and Christchurch.

In turn the number of seats available between Rotorua and Auckland will increase by a third. Tauranga is also well served and capacity is increasing by 18 per cent across the direct services.

The roll out is the outcome of a comprehensive review of Air NZ's regional aircraft operations aimed at delivering sustainable air services and lower prices for customers.

'While today's news will be disappointing for some communities, Air New Zealand remains resolutely committed to regional New Zealand,” adds Christopher.

'The changes announced today will set up our regional business model for future sustainable success.

'I also acknowledge this news is disappointing for Eagle Airways' staff. Eagle Airways management, staff and unions will now begin a process of determining the future of the business.

'The airline has 232 employees and there are good redeployment opportunities across a rapidly growing Air New Zealand Group.”

Christopher says as 2014 has unfolded it has also become clear there are some regional routes where demand for seats is strengthening.

He adds: 'Air New Zealand has already begun putting more seat capacity into those markets and is announcing today an acceleration of that process with an additional $100m investment in four new 68-seat aircraft.”

This brings total investment in new 68-seat aircraft to $300m over four years and will mean that Air New Zealand will move all regional flying to either 50 or 68-seat aircraft and exit its 19-seat fleet by August 2016.

Christopher explains: 'Our average regional airfare has fallen by two percent over the past five years and today's announcement will keep further downward pressure on regional airfares.”

'On the 13 routes which will move from 19-seat aircraft to more cost effective 50-seat aircraft we expect to deliver a 15 per cent average fare reduction to our customers.”