National carrier Air New Zealand beefed up domestic capacity in the face of rising passenger numbers, particularly on Auckland-to-Queenstown routes which showed up in higher domestic passenger movements in Auckland International Airport's latest figures.

Auckland-based Air NZ increased passenger numbers 5.2 per cent to 1.61 million in March from the same month a year earlier and expanded its available seat kilometres (ASK) 4.1 per cent to 4,057 million, it said in a monthly investor update.

Of that, domestic passenger numbers climbed 8.3 percent to 1.09 million and ASK climbed 7.9 per cent to 672 million, which Air New Zealand said was due to "increased services on Auckland-Queenstown and the main trunk routes, as well as growth on the regional routes resulting from up-gauging to larger aircraft."

Auckland Airport's monthly traffic figures show domestic passenger movements rose 8.4 per cent to 807,401 in March, outpacing a 6.6 per cent gain in international passengers excluding transits to 397,706.

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Domestic aircraft movements increased 6.3 per cent to 10,549.

Queenstown airport, which is quarter-owned by Auckland Airport, posted an 11 per cent increase in domestic passenger numbers in March to 132,086, even as domestic plane movements slipped 1.6 per cent to 959.

Air NZ is the country's dominant carrier on domestic routes, although Qantas Airways subsidiary Jetstar has been making inroads on an expanded New Zealand offering in recent years, including joining the government's list of preferred travel suppliers for local travel.

The airline's update shows domestic passenger numbers have climbed 5.8 per cent to 7.86 million in the nine months to March 31, and ASK has expanded 7.6 per cent to 4,999 million, outpacing the group's 4.1 per cent increase in passenger numbers to 12.1 million and a 6.5 per cent capacity expansion to 32,408 million ASK.

The tourism sector has been a major leg to the country's economic growth over the past year as cheap oil prices lured airlines to open more marginal routes and foreign travellers were less deterred by New Zealand's geographical distance.

Government data yesterday showed short-term arrivals rose 8.9 per cent to 3.54 million in the year ended March 31, matching the previous record set a month earlier. Air NZ's long-haul passenger numbers slipped 0.7 per cent to 190,000 in March, and were up 4.6 per cent in the year to date at 1.56 million, while its Tasman/Pacific routes posted a 1 per cent decline in passengers to 332,000 in March for a 0.6 per cent dip in year-to-date numbers to 2.73 million.

Auckland Airport said visitor arrivals from Australia dropped 7.1 per cent to 77,022 in March from a year earlier due to the later Easter and school holidays. Still, US visitors jumped 26 per cent to 31,536 in March, taking the year-to-date arrivals to 216,416, up 32 per cent from a year earlier.

Air NZ shares slipped 0.2 per cent to $2.48 and Auckland Airport stock increased 0.2 per cent to $6.85.