The organisation responsible for managing air traffic in New Zealand is "very happy" a dispute which threatened Air New Zealand's regional services has been settled.

Airways New Zealand and the New Zealand Airline Pilots Association (NZALPA) were at odds over how best to deal with a law taking effect tomorrow making rest breaks compulsory for control tower staff.

The dispute prompted Air New Zealand to say it would be forced to cancel 25 regional services to and from Gisborne, Napier, New Plymouth, Rotorua and Invercargill, if the issue could not be resolved.

An agreement, reached late last night, came after six months of "extremely difficult and drawn out" negotiations, Airways New Zealand chief executive Ashley Smout told NZPA today.

"At all times I think all parties wanted to avoid the spectre of tower closures," he said.

"We're very happy to have reached that agreement."

Mr Smout said the agreement differed from place to place, with about 20 different rosters in operation around New Zealand.

"Broadly speaking it's a regime of both formalised meal breaks and self-breaking depending on traffic levels.

"Depending on each location and depending on traffic and manning levels we've come up with a specific arrangement in each area."

Set breaks alone would likely force towers to close and that was "the least favourable outcome," he said.

Both parties had to make compromises throughout the negotiation process, he said.

"We have made some consideration for this in the form of an allowance, a lot of our people have had to work very hard to get rosters to work ... I think there's been quite a bit of sacrifice all round."

The dispute could have been resolved earlier but both parties bargained "in good faith," Mr Smout said.

Yesterday Prime Minister John Key said the Government would change the law if the dispute wasn't settled in a "commonsense way".

Mr Smout said he appreciated the Government's interest in the matter.

"I think having the Prime Minister make it clear where he stood on the issue was certainly helpful."

Under the Employment Relations (Breaks and Infant Feeding) Amendment Act passed by the previous government, workplaces must provide two 10-minute rests and one half-hour meal break during eight-hour shifts. They must also provide time for breastfeeding.

Both NZALPA and Air New Zealand declined comment.

- NZPA