Melbourne-based OzJet Airlines has cancelled planned services between Brisbane and Palmerston North (New Zealand) scheduled to start on 31 March. The airline issued a statement today saying it was in takeover talks and would not proceed with the planned new service.

OzJet planned to establish itself as a trans-Tasman carrier following the pull out of now defunct Air New Zealand subsidiary carrier Freedom Air on the New Zealand route.

The carrier had been experiencing turbulence after a slower than expected start in ticket sales. However, business is believed to have built up in recent days with the Ozjet taking 3500 bookings for its proposed twice weekly service between Brisbane and Palmerston North. The airline said it would issue refunds on all paid tickets for the new service.

OzJet had planned to offer a two-class service on board its B737-300 series aircraft. The aircraft was configured with 12 business class seats and 112 economy seats and said it would offer full meal service.

Sydney and Melbourne services were also slated for later this year but will not now go ahead as originally planned.

OzJet began a Perth-Bali Service three times a week service in conjunction with Indonesia-based IndoJet in November last year. The service was later reduced to one flight a week in January this year as demand was slow to build. However business has improved and the airline was expected to go to three flights a week in June-July and was understood to be considering operating a fourth service.

OzJet also operates flights to Norfolk Island.

OzJet cited recent merger talks “which are nearing completion” for its decision not to proceed as scheduled.

Willie O’Neill, chief executive of Ozjet said: “The potential for trans-Tasman services and the opportunities that the Manawatu connection presented was first class and it regrettable that we cannot move forward at this time.

“OzJet has worked closely with a number of key stakeholders in New Zealand including the Palmerston North International Airport company, Destination Manawatu and Palmerston North City Council and a number of other organisations. Planning for the new services was well advanced and there will be disappointment with this sudden change of plan which has been driven by events beyond the control of any one party.”