South American airline Latam is cutting services through Auckland, reducing travel options for Kiwis.
The airline will from the end of October fly directly from Sydney to Santiago three times a week, instead of stopping over in Auckland on those days.
Latam is not commenting on its move from daily flights, saying only that it remains committed to the New Zealand market.
The loss of some of its transtasman flights will take about 80,000 seats out of the market a year.
Auckland Airport's general manager of aeronautical commercial, Scott Tasker, said Latam was changing the way it serves the Oceania region.
One reason for the stopover was historical due to the range of aircraft and rules over how far they could fly from airports.
However, Boeing 787-9 Dreamliner aircraft used on the route were easily capable of the 11,340km non-stop flight.
''We were the midpoint, and now we're being overflown to serve the Sydney market direct.''
More than half the passengers flying on to Chile were from Australia so it made financial sense to Latam.
''From a financial perspective for Auckland Airport it is not a material impact,'' said Tasker
Passengers to and from South America (including transits) made up less than 2 per cent of more than 11 million international passengers through the airport.
''It's unfortunate that won't see Latam here every day but we're pleased to see they will use a four per week service.''
He said Latam, although a very big airline, was facing pressure in its regional market due to economic weakness and volatility in Brazil and Argentina in particular.
''It's a tough business there at the moment. They have to be very nimble in making decisions to optimise the profitability of their business.''
Economic troubles had led to the collapse of the Argentine peso, in turn leading to a sharp drop of arrivals from that country. In the year to April arrivals from Argentina - served directly by Air New Zealand and indirectly by Latam - were down from 23,000 arrivals to 16,500.
''They had been growing really strongly but they've fallen back. That's what happens when your currency falls by 50 per cent last year and another 17 per cent this year. Even if you are in the wealthy traveller set it is really challenging.''
Latam also faced the prospect of greater competition from Qantas to South America as it retired its Boeing 747 jumbo jets and brought in more of the smaller and more efficient Dreamliners.
This could allow the Australian airline to fly more frequently.
Auckland has been positioning itself as a stopover point or hub between southern Asia and South America.
Tasker said Latam's decision to overfly Auckland and improving aircraft technology didn't weaken that proposition. Airlines still needed to stop off somewhere between the two parts of the world.
''The opportunity of hubbing through Auckland doesn't change because the aircraft economics and demand stacks up against being able to fly between the southern part of South America and South Asia.''
Helloworld group general manager Simon Mckearney said the retraction of Latam's service was not a demand issue as South America had been strong for his firm.
''Latam do have good very good connectivity in South America and this move appears to be right sizing ex-New Zealand.''
He said the Tasman was ''a tough gig any day of the week'' for airlines competing hard, so he didn't expect the loss of the flights to affect prices although Latam is often the cheapest in the market with last-minute fares.
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