"The greater number of destinations, higher frequency of service and wider range of connecting options on offer at the neighbouring airport have served to undermine demand for Whanganui services, and we've seen customers effectively voting with their feet and using Palmerston North rather than Whanganui."
He said though the company had "almost halved the average fare on this route, we've been unable to create sufficient additional passenger volume to sustain an ongoing service, and this means we will cease operating to Whanganui".
Customers booked to travel on suspended services past July 31 will be offered the choice of a full refund or travelling via an alternative port.
Whanganui mayor Annette Main said the decision was disappointing, but Air Chathams had stepped in.
"Air Chathams has approached us and said that, immediately the Air New Zealand service ends, they are able to provide the same scheduled daily Whanganui-Auckland flights with their 19-seater Metroliner.
"It is encouraging to know that there is a player in the market who recognises the importance of provincial connections with our main international gateway and believes providing that service is a sound business decision," she said.
"While we are extremely disappointed with Air New Zealand's decision, we look forward to working with Air Chathams, who have a reputation for providing a reliable and efficient service."
Whanganui MP Chester Borrows described Air NZ bowing out as "a disappointing commercial decision because it is a flawed decision".
"How the community responds is key," Mr Borrows added.
"We can sulk about this for three weeks or shake the living daylight out of the opportunity we have to prove them wrong," he said.
"We should embrace the announcement from Air Chathams, get on the front foot to positively market the beauty, vibrancy and business that are in Whanganui."
Air Chathams chief executive Craig Emeny said last night he was "encouraged by the resolve shown by Whanganui-elected representatives to get in behind Air Chathams following Air NZ's decision to discontinue their Whanganui services".
"I am excited at the prospect of getting to know more about the region and its people in the coming months and continuing the air service the community need."
Air Chathams fly to Whakatane from Auckland, as well as the Chatham Islands and they also operate a charter business.
The weekday service will be the same, though the weekend may change.
