Air New Zealand is killing off Freedom Air and has announced changes to some of its international routes.
The airline says there is no point having a low-cost subsidiary anymore as airfares have fallen so much in the past 10 years that there is little difference in price.
Spokesman Norm Thompson said Freedom's services will be taken over by Air New Zealand flights from the end of March next year.
However direct services to Australia from Palmerston North are being scrapped, because of a lack of demand.
"We had been hoping to strengthen demand for Palmerston North services by combining Qantas and Air New Zealand demand with the proposed Tasman codeshare arrangement," he said.
"But when this proposal was discontinued, the future of such routes became far less certain."
Air New Zealand expects Wellington Airport to be the main beneficiary of the Palmerston North development as the national carrier will add nine new city pairs, including one new Australian port (Coolangatta) and two new New Zealand ports (Dunedin and Hamilton) to its international network.
Mr Thompson says no redundancies are likely and affected staff are being consulted and would be offered jobs within the company.
Air New Zealand has also announced plans to upgrade its trans-Tasman and Pacific services.
It is promising more spacious economy seats, better inflight entertainment and an improved food and drinks selection.
