The larger planes would provide 75 per cent more seats than available currently.
Having the bigger Bombardier in service and more seats would also mean changes to the flight schedule.
"Air NZ currently operates four return trips every weekday between Wanganui and Auckland, with three return trips on a Saturday and four on a Sunday.
"All of these services are operated by 19-seat Beech aircraft," Mr Luxon said.
"From February 2016, we will operate three return services between the two ports on weekdays, two on Saturdays and two on Sundays because these services will be exclusively operated by larger 50-seat aircraft."
And Mr Luxon said passengers should be seeing cheaper fares.
"By moving from a 19-seat aircraft to a 50-seat one, we expect to be able to reduce the average airfare by 15 per cent because of the better economies of scale achieved from distributing fixed operating cost across 50 passengers, rather than just 19," he said.
The airline is going to quit services to Kaitaia, Whakatane and Westport next year as it tries to control rising costs of servicing regional routes, which, Mr Luxon said, had increased significantly in the past five years.
"Fuel costs are up 14 per cent, total navigation charges have increased 23 per cent and we're paying 46 per cent more in airport charges.
"These three costs alone account for 40 per cent of our regional cost base.
"We've worked very hard not to pass these increases on to our customers.
"In fact our average regional fare is down 2 per cent in nominal terms over the same period which is more than 10 per cent when adjusted for inflation," he said.
Those costs were especially challenging on the regional routes because "they are spread across fewer seats which means the smallest aircraft in our fleet (the Beech) actually has the highest per seat cost to operate".
Eagle Airways, which operates the Beech planes to 15 regional centres including Wanganui, had been losing more than $1million a month for the past two years.
"That's the equivalent of losing $26 on every one-way ticket sold," he said.
Meanwhile, Wanganui people are being urged to use the flight services to and from the city otherwise the future of services through Wanganui would be jeopardised.
Alan McGibbon, Wanganui Airport manager, said while the focus was on Air NZ's plans, locals needed to get in behind the Sounds Air service which was running two return flights daily to Wellington.
"Frankly, they're not being especially well supported at the moment which is a shame.
"But people need to be reminded that if they don't use it they lose it," he said.