Travel agents say Air New Zealand's plan to have its budget operations pick up more flights across the Tasman could lose it customers.

The airline is considering cutting costs by increasing flights by its low-frills company, Freedom Air, after already announcing that it will reduce seat capacity on its main service by 11%.

The decision follows Air New Zealand's failure to secure a codeshare agreement with Qantas.

Brent Thomas from the House of Travel says the most significant impact will be for business travellers, who will have less choice for the level of service they want and may choose other carriers.

The Flight Centre says there will always be business class seats on flights at peak times, but they may be less frequent than now.

Currently, about 1 million people fly each way across the Tasman each year, with Air New Zealand taking about 35% of the market with about 120 flights weekly.

Less Efficient

Air New Zealand chief executive Rob Fyfe said people seemed to believe that life would go on as normal after the Australian Competition and Consumer Commission barred the two airlines from codesharing their trans-Tasman flights.

He said the decision meant airlines would be less efficient, with more flights carrying fewer passengers to and from Australia and New Zealand.