Pacific Blue says the low fares it promoted is part of the reason it's now pulling out of the New Zealand domestic market.
The airline will stop flying locally from mid-October and use its New Zealand-based aircraft for trans-Tasman and medium-haul routes to Asia.
When the airline began New Zealand domestic services in late 2007, it made a commitment to stay in the market despite predicting it would not be profitable at first.
Pacific Blue chief executive Mark Pitt says the airline's low prices became unsustainable once the competition began following suit.
