Eagle Air general manager Carrie Hurihanganui said despite the best efforts of the company and the Waitaki District Council, Eagle Air could no longer sustain significant losses being incurred on the Oamaru service.
Passenger loads on the service had averaged 45% over the past six months - the equivalent of 63 empty return trips with the 19-seater Jetstream aircraft.
Mr Ormsby said the development board and council had been working with the company since last year to retain the service.
"I'm really disappointed because the service exposed Oamaru and the Waitaki district to the world as a visitor destination.
"But we're not giving up the ghost yet and we'll keep trying to keep a service," he said.
That included keeping in contact with Eagle Air, with the board also open to approaches from other airlines.
The district has some possible major developments on the horizon, including proposals for a new cement plant by Holcim (New Zealand) Ltd, a proposal by Meridian Energy for a new power scheme on the lower Waitaki River, new irrigation schemes and a new dairy processing plant near Glenavy.
Mr Ormsby said Eagle Air was aware of all those proposals, but was unable to wait for them to reach fruition.
Waitaki Mayor Alex Familton said the council had been working hard behind the scenes to keep the service - all possible efficiencies and savings were explored with Eagle Air.
Mrs Hurihanganui said weak demand meant the Oamaru-Christchurch service was no longer viable.
"Eagle Air will regularly review this decision and is committed to reintroducing scheduled services should the prospect of higher demand arise," she said.
Council chief executive Michael Ross said the situation would continue to be reviewed with an intention to reinstate a regular service.
The decision to end the flights mirrors what happened in 1990 when Air NZ stopped its Friendship flights into Oamaru and Air Nelson took over the service.
Air Nelson continued the service, then changed flight times in a bid to make it profitable. That did not work and flights finished on October 28, 1991, leaving passengers having to drive to Timaru or Dunedin to catch flights.
Other options were explored in the following 15 years, including setting up a community company or using the North Otago Aero Club. However, none came to fruition until then Waitaki mayor Alan McLay negotiated a service with Eagle Air, which started on August 6, 2006, with great fanfare.
The first flight had 14 passengers and about 120 people welcomed the aircraft, Spirit of Waitaki, when it touched down from Christchurch.
• TIMELINE
April 1990: Air New Zealand ends Friendship flights to Oamaru.
April 23, 1990: Air Nelson takes over flights with Metroliner.
October 28, 1991: Air Nelson ends flights and Oamaru loses service.
1991-2006: Various options explored to reinstate air service.
2005-2006: Waitaki District Council spends about $500,000 upgrading runway, terminal building and other facilities.
2006: Waitaki Mayor Alan McLay starts negotiating for new air service.
June 20, 2006: Eagle Air announces new Oamaru-Christchurch service.
August 7, 2006: First flight lands at Oamaru to be greeted by about 120 people.
May 18, 2009: Eagle Air changes schedule amid fears service in trouble.
October 13, 2009: Eagle Air announces service will end from January 1, 2010.
