It had been understood the airline hoped to review its jet capacity around the end of this year, or in the first quarter of next year, following engine issues with its fleet.
But a new report from Dunedin Airport management says it is not expecting the situation to improve before the end of 2026.
The report shows passenger volumes through Dunedin Airport dropped by 3.6% and available seats fell 2.1% in the six months from July to December last year compared with the same period in 2023.
Demand remained under pressure due to ongoing economic challenges and elevated market prices, driven by Air New Zealand’s constrained capacity, it said.
Passenger volumes were tracking 1.8% behind the half-year forecast, off the back of a 2.2% decrease in capacity.
The interim report, which will be considered by airport shareholder the Dunedin City Council today, said domestic seat capacity remained limited due to Air New Zealand’s ongoing fleet challenges.
The airport did not anticipate any "meaningful improvements" in the airline’s capacity until late 2026, it said.
Members of Dunedin’s business community have complained about recent changes to the size of planes and schedules, particularly to the capital.
Since late February, Air New Zealand has been using a 68-seat ATR-72 turboprop plane instead of the roomier 171-seat Airbus A320 on its morning and evening flights between Dunedin and Wellington, meaning the first flight of the day arrives in Wellington 50 minutes later than it did before.
She knew of a lot of people who already drove to Queenstown to catch international flights because it was more convenient.
"It’s a risk that we have a self-fulfilling prophecy, and that the availability of flights and the reliability of flights become so difficult that it causes a change in behaviour."
From her own experience travelling, Mrs Ramsay said it appeared the key business-hour flights were in high demand but continued constraints on capacity would make it harder to do business from Dunedin.
"That’s where, as a business community, we need to start getting more co-ordinated and plan ahead," Mrs Ramsay said.
Dunedin Airport chief executive Daniel De Bono agreed any reduction in available seats impacted Dunedin’s connectivity with the world.
The figures reflected the "sustained softening of domestic travel demand due to the recessionary environment, alongside a reduction in corporate and government travel".
Aviation was a cyclical industry that experienced both downturns and periods of growth.
"This contraction is part of that natural ebb and flow."
While the downturn was not ideal, it was "not a cause for concern" and they were already seeing early signs of recovery, he said.
Meanwhile, he was "excited" about Jetstar’s new Dunedin-Gold Coast thrice-weekly service, starting in June, but was disappointed the government was utilising powers given to it under a 2014 law — the Airports (Cost Recovery for Processing International Travellers) Act.
The Act allows the Crown to recover from airports some of the costs incurred when establishing border services for new or restarted international services.
The mandatory regulations, which came into effect today, were "unnecessary" as a new national border processing levy system already ensured international passengers contributed to the costs of border control, Mr De Bono said.
The airport was still working with officials to fully understand the impact of the regulations, he said.
It has been estimated affected airports may have to pay between about $1 million and $2m for border services.
