An appalled customer took to Twitter on Saturday to express his horror at the prices of flights between Auckland and Christchurch.
At the time a return trip would have cost between $747 to $787.
Finance Minister Grant Robertson also rebuked the airline.
Robertson had contacted Air NZ to "make his views clear" about this being a time when the airline should offer "compassionate fares".
Air NZ is owned by the government and Robertson is a shareholding minister in the airline.
"I have just made contact with Air New Zealand and made my views clear," he said late last night.
"I know they do offer compassionate fares at times and this would have to be one of them."
Robertson later added that Air NZ had confirmed to him that they were "offering compassionate fares for families affected and they have decided to reduce fares to Chch for next few days significantly from what they were earlier today".
"Their call, and the right one."
In a statement this morning, Air NZ said: "The airline has had compassionate fare assistance in place since Friday which has seen it offer free travel to immediate family of deceased as well as discounted compassionate fares to other affected friends and family with close to 100 bookings made so far, including a number of group bookings."
Guled Mire, who first raised the $700-plus fares, said on Twitter: "[Air New Zealand] this is ridiculous! People are literally trying to fly into Christchurch to be with loved ones and for funerals happening in the next day or so. Pretty pathetic to be prioritising profit in current circumstances."
Air NZ quickly replied, saying: "We're saddened by the tragic events that has occurred and are trying to help those with travel over the weekend and those that are directly affected. Although we've been putting on additional capacity we have very little availability which is why the fares have increased."
• Read more: Christchurch mosque shooting: The faces of the victims
Mire went on to say that Air NZ's response was "ridiculous and not okay".
"Islamic customs require the deceased to be buried as soon as possible. Least you can do is offer some sort of assistance or discount to those with genuine hardships affected by the current situation. I don't buy it being out of your hands," he said.
The post also attracted much attention with people labelling the airline's stance as "appalling", "infuriating" and "obscene".
"Sort this out @FlyAirNZ this is not the time for profit," one person wrote.
Another said, "Oh my God @FlyAirNZ. This is a national tragedy. Throw out your rulebook for this occasion. Lower the prices. People need to get in and out of Christchurch and this is not the time to profit off a tragedy."
Another commenter also wrote, "People are trying to farewell their loved ones, and @flyairnz is profiteering. I fly this route three times a week. These prices are x3 [normal]. Our national carrier is making a profit from terrorism."
Air New Zealand was quick to change their stance, and within the hour stated that "due to the increasing customer demand for travel to Christchurch in the coming days we will be reducing fare levels and increasing capacity".
The airline also stated that it would offer compassionate fares to affected friends and family.
"Since this tragedy began unfolding we've been offering direct assistance to immediate family of deceased and discounted compassionate fares to other affected friends and family from around the world. We have also been supporting the transport of emergency personnel to Christchurch," it said.
As of 6am Sunday morning, return flights between Auckland and Christchurch were now selling for as low as $139, and range between $109 - $289 from Wellington in the next three days.
Mire said while he was thankful for the compassionate fares, Air NZ needed to do a better job at communicating these messages to Muslim communities.
"So grateful for the power of social media...please continue championing this important cause. Prices are still not low enough if you ask me," he wrote.
In its statement later this morning announcing the $139 fares, Air NZ said: "Beyond the measures Air New Zealand has introduced for customers affected by the shooting tragedy in Christchurch, it has also been working closely with the Prime Minister's office to support the transport of key people to Christchurch including emergency services personnel.
"The airline has transported more than 70 Police officers from around New Zealand to Christchurch and various emergency support personnel, including eight specialist doctors from Auckland, Hamilton, New Plymouth, Wellington and Tauranga."
