Jetstar will quit flying from Auckland to Singapore from July, saying the route is not performing as well as it had hoped.
The budget airline is also facing the prospect of stiffer competition.
Jetstar started flying daily Singapore-Auckland services in March 2011, but this was later reduced to three times a week.
The airline is facing the prospect of greater competition on the route from the proposed Air New Zealand-Singapore Airlines alliance, which if approved will result in the New Zealand airline returning to flying its aircraft on the route and its partner moving towards using an Airbus A380 to Auckland.
Jetstar is part of the troubled Qantas group but says it is expanding elsewhere between Australia and Asia. In the next few months starting long haul services between Melbourne and Tokyo Narita and between Brisbane and Bali.
A spokesman said Jetstar had provided competition to the monopoly routes and had provided low fare choice on the Singapore-Auckland service.
"Unfortunately the route has not performed as we would have liked and we have decided that the capacity could be put to better use on other routes," he said.
All passengers booked on the Jetstar service beyond July 21 will be offered the option of a full refund, bringing their flights forward to travel before direct services end, or transferring to a connecting service via Australia.
The airlines withdrawal is a blow to the travel industry. Auckland Airport in its recent submission on the proposed Air New Zealand-Singapore Airlines alliance had urged the government to carefully consider the impact on the competitive environment on the route.