Emirates is cutting its services from Auckland to Australia in a major shake-up of the transtasman market.

Although partner airline Qantas will partly fill the gap with new services from Melbourne and Brisbane, capacity on the Tasman will drop signifcantly.

Around 300,000 seats from 10.2 million a year could be lost from transtasman route, leading travel industry sources to forecast a pause in cut throat competition and falling fares.

In Sydney today, Emirates said it will focus on its non-stop service from Auckland to Dubai and will retain its existing daily A380 flights from Christchurch to Dubai via Sydney.

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Emirates is also evaluating potential new direct services between New Zealand and Dubai but has no set time frame for making a decision.

The announcement today follows Emirates' withdrawal from Auckland-Sydney services earlier this year and will be a blow to travellers who chose the A380 for its lavish business class. The Tasman is one of the most competitive routes in the world and airlines have struggled to make it profitable.

Emirates president Sir Tim Clark said the route had become "flakey'' for his airline and A380s making short hops across the Tasman no longer worked financially.

Many passengers have opted for the non-stop 17-hour Auckland-Dubai flight, which started in March last year, rather than stopping in Australia. Qatar Airways' Auckland-Doha flights have also drawn passengers from Emirates' flights via Australia.

The airlines say the changes would provide greater year-round frequency and more services between Australia and New Zealand.

"These changes reflect customer demand and the airlines' respective network strengths and provide more options for customers to travel between Australia and New Zealand to Asia, the UK/Europe, Middle East and Africa," the airlines said.

The changes from March next year will mean Qantas will increase the frequency of its services between the two countries, adding seven new return flights per week between Melbourne and Auckland and an extra two return services a week between Brisbane and Auckland.

Some of these services will be up-gauged from a 737 to a wide-body A330 aircraft, now being used on some Auckland-Sydney flights.

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Emirates, the biggest long-haul carrier in the world, has been flying here for 14 years and had rapidly grown before pulling back this year. At its peak there were up to four Emirates planes on the ground at Auckland Airport during the afternoon.

Sean Berenson, general manager of product at Flight Centre, said fewer seats usually meant fares would rise.

Another travel industry figure said there could be a return to `more rational' fares.

Qantas' new transtasman services will carry Emirates code and will connect to Qantas' London services via Perth or Singapore and Emirates' services between Australia and Europe via Dubai.

"Customers flying between Australia and New Zealand, particularly business travellers, will benefit from the improved schedule choice."

The changes also enabled Emirates to reschedule its Australia flights to create a better spread of departure times throughout the day, offering customers more choice when connecting and arriving in European, Middle East and North African destinations.

These latest changes are included in the airlines' application to the Australian Competition and Consumer Commission (ACCC) and New Zealand Minister of Transport for the extension of authorisation for the airlines' joint business for another five years.

The airlines' joint submission also includes, as previously announced, Qantas' rerouting of its Sydney-London service via Singapore rather than Dubai and Emirates' new, fourth daily A380 Sydney-Dubai service.

Emirates boss Clark, said the first five years of the partnership has been a success.

"Reauthorisation of the partnership will allow us to leverage our combined network strengths to offer customers even more flight choices and reciprocal benefits for our millions of frequent flyer members.

"It will enable us to continue developing world-class customer experiences, and contribute to stimulating increased opportunities for international trade, tourism and commerce."

Qantas Group chief executive Alan Joyce said the partnership was being enhanced to reflect customer demand, new aircraft technology and the airlines' respective network strengths.