"There's no way we can operate an aircraft as cost-effectively as these gentlemen can."
The Taupo Airport Authority has also had two other approaches about a Taupo-Wellington service, said mayor David Trewavas.
Air New Zealand chief sales and commercial officer Cam Wallace told the meeting the 19-seater Beech aircraft operating out of Taupo and other regional airports were coming to the end of their useful life.
Where possible, they would be replaced with 50-seater aircraft but on some routes the demand was not large enough.
"But the positive news for Taupo is that on the Taupo-Auckland service we think we can make that work with a 50-seat aircraft and we'll have more seats," he said.
But he acknowledged that while the timing of the larger planes coming into Taupo from 2016 would be convenient for people travelling from Auckland, it would be more difficult for locals, at least in the short term.
"For people based in Taupo doing business in Auckland for the day, it will be more difficult. It's possible to do a return trip to Auckland in a day, but you'll get to Auckland mid to late morning and have to leave at 4pm."
Asked whether Air New Zealand would allow another operator to offer an Auckland-Taupo service with more convenient timing, general manager networks Richard Thomson said no.
"They would be in direct competition with Air New Zealand at the same time."
Mr Wallace said Air New Zealand would be legally obliged to compete with any operator offering the same route.