Napier Mayor Bill Dalton says Air New Zealand is not price gouging in Hawke's Bay and the region risks losing air services if the airline takes offence at the claims.

But Air NZ said its decisions are made on business realities and it is boosting capacity into the region because Hawke's Bay is a growing market for the airline.

Air NZ has been accused of hiking regional ticket prices in order to keep fares on other parts of its network low.

The airline denies the claims, saying growing its business involves offering more cheap fares on regional routes and during the past five years it has increased the number of sub-$100 regional seats it offers each year from 600,000 to about a million.


It also says average regional air fares have fallen by around 1 per cent during the past five years despite escalating fuel prices and significant increases in other costs.

Mr Dalton said he did not believe the price gouging claims.

"If in fact they were charging horrendous prices and it was so enormously profitable for Air New Zealand that they were able to subsidise other services elsewhere, then it would take five minutes and there would be a competitor in here," he said.

Mr Dalton and Hastings Mayor Lawrence Yule are due to meet Air NZ's regional services manager, Ian Collier, next week to voice concerns about the company's plans to restructure its Hawke's Bay operations.

The plan includes a proposal to close subsidiary Air Nelson's Napier crew base which would see 36 jobs, and about $2 million in annual wages, shifted out of the region.

The airline would reduce Q300 flights to the Bay, replacing them with larger ATR72 aircraft, saying the move will boost capacity in and out of the region, maintaining downward pressure on fares.

While Mr Dalton and Mr Yule have said they are determined to press the case for the region to retain jobs and services, Mr Dalton said he accepted the airline's plans to increase capacity on Hawke's Bay routes was aimed at keeping fares down.

"We can't have it every which way and I think we need to be very careful with Air New Zealand," he said.

"Don't forget a town like Masterton jumped up and down and made such a big hoo-ha about them being gouged on fares out of the provinces that Air New Zealand said: that's all right, we'll stop servicing Masterton."

Air NZ spokeswoman Emma Field said the Masterton decision had nothing to do with complaints about price gouging.

"Air New Zealand makes business decisions based on business realities. Decisions on where to operate to and how much seat capacity to put into any given market are driven by economic factors," she said.