Kiwi Regional Airlines cancelled a Queenstown flight on Wednesday due to fog - its second weather disruption in its first two days of operating.
The one-aircraft airline launched with a flight from Dunedin to Queenstown on Tuesday morning using its 34-seat twin turbo-prop Saab 340A.
Kiwi Regional Airlines chief executive Ewan Wilson said customers booked on Wednesday's cancelled flight were refunded, he said.
The Hamilton-based airline, which also flies between Hamilton, Nelson and Dunedin, slashed its Dunedin to Queenstown service on Tuesday due to a lack of passenger demand.
The airline had planned twice-daily flights on the route on Mondays, Wednesdays and Fridays but reduced it to return flights on Monday morning and Friday afternoon.
Aviation commentator Irene King said operating an airline with just one aircraft on routes with low passenger volume was "incredibly challenging."
There were no other Saabs operating in New Zealand which meant the airline could experience long delays or cancellations if parts were needed for maintenance, she said.
"The biggest issue is what sort of alternatives have they in place if that happens."
A good operator would have an agreement either with another airline or bus service to provide services for stranded passengers, King said.
"It's just very challenging operating an airline with one aircraft."
Wilson said Kiwi offered bus transport between Dunedin and Queenstown for Wednesday's affected passengers but they all preferred a refund.
He said Kiwi had $500,000 worth of spare parts in Auckland as well as parts in Dunedin.
If they could not find parts they needed in New Zealand they would have to approach Australian carriers operating Saabs, he said.
Wilson said its Saab was purchased for about $2 million and he hoped to acquire a second aircraft within 12 months.
"It's really in our best interest to add capacity as quickly as possible."
Customers' airfare payments were held by a credit card payment facility based in Europe and Kiwi could not draw those funds until a passenger had travelled.
The airline's working capital came from shareholders rather than passengers' money.
Wilson said a Saab was the airline's aircraft of choice because it was "a really reliable workhorse" but maintenance issues were a reality of flying.
"I'm not going to sit here and tell you that our airplanes won't ever break down."
King said Kiwi Regional Airlines' routes were not serviced by other airlines because they were difficult to make work, especially Dunedin-Queenstown which had never attracted many passengers.
"I would have thought if there was volume of any substance Air New Zealand would have been into it a long time ago. They understand this market backwards."
Meanwhile, Dunedin Airport welcomed its first new domestic jet service in more than four years on Wednesday afternoon with the arrival of an inaugural Jetstar flight from the Wellington.
The service competes with Air NZ's jet and tubo-prop services on the route.
The Wellington-Dunedin service is Jetstar's sixth domestic jet route and comes ahead of the airline beginning regional services to Palmerston North, New Plymouth, Napier and Nelson from December.
Original article can be found here: http://www.stuff.co.nz