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Otago Air had no chance of getting off the ground, he said.
''I don't think people appreciate the cost of setting up an airline, just the compliance cost to apply for a licence and to get through the regulatory issues,'' he said.
He believed people would be throwing their money away if they invested in such an idea and the whole episode was embarrassing for Dunedin.
''It is very concerning, because I tell you what, we are the laughing stock of the country.''
''I have had emails ... they have said they hope [the Otago Daily Times story is] an April Fools' joke.''
Mr McLauchlan also disputed arguments Dunedin International Airport was not well served.
''What you need to remember is that outside Christchurch, Wellington, Auckland and Queenstown, we are the only other city that still gets jet flights.
''Go and talk to people in Hamilton and Napier. They would love to have the services that we have got.''
In the end, the issue came down to Dunedin's economy.
''Queenstown has gone past us in terms of volume going through their airport [and] with the trends that are likely to happen in the next year or two, Nelson is going to go past us,'' Mr McLauchlan said.
''The issue around our air services is the city is not growing. If the city was growing, we wouldn't be having this discussion.''
Air New Zealand cutting its evening flight between Auckland and Dunedin earlier this year was less than ideal, but the airport was working with the airline to get the service re-instated next year.
''I believe we are well served. We have just had a little hiccup in the short-term because when the Air New Zealand fleet was replacing 737s with A320s, there was one less plane in the fleet.''
That was why Air NZ changed the schedules, but it had another plane arriving early next year.
People could still catch a 7.15pm service from Auckland, which stopped in Wellington.
''You can still get back from Auckland in the evening. It's just that you stop in Wellington for 20 minutes.''