Eagle Air, a wholly owned subsidiary of Air New Zealand, is suspending its loss making service between Christchurch and Wanaka from January next year.
The service was first introduced in 2004 but has struggled commercially.
Eagle Air general manager Carrie Hurihanganui says the situation has been exacerbated by ongoing cost increases, including those at both the Christchurch and Wanaka ends of the service.
She said Queenstown Lakes District Council increased facilities rental costs at Wanaka Airport last year and Christchurch International Airport Limited recently declared a 63% increase in landing fees from December, with another increase planned for July 2013.
Hurihanganui added, "For more than eight years we’ve worked hard to try to make this route work. We’ve tried increasing schedule frequency, different service timings, reducing fares, investing in promoting the service and working with local stakeholders.
"All of this has proved unsuccessful and only added to the hundreds of thousands of dollars we have lost on this route over the years."
The last flight to operate this service will be January 30, 2013.
