Air New Zealand will cut capacity across its domestic network in the next financial year as its growth outlook weakens, prompting one travel expert to warn of fare increases.

The airline says its domestic growth has increased 20 per cent during the past five years to around 13.8 million seats.

However, there will be a ''slight decline'' of 2 per cent in domestic seats in the coming year.

This will be achieved by ''targeted frequency reductions in select markets,'' an investor day presentation slide says.

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Air New Zealand has seen a slowdown in domestic demand, particularly from leisure travellers as

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