A major domestic airline has filed for bankruptcy after furloughing half of its staff last month.

Air Calédonie is the domestic airline for New Caledonia, a French territory comprising dozens of islands in the South Pacific.

It plunged into financial difficulty in early March. All flights were grounded as key airfields were blocked by residents protesting against plans to relocate the airline's operations from Magenta Airport in Nouméa to La Tontouta International Airport.

The crisis led to 220 staff members being furloughed, with Air Calédonie also filing for bankruptcy.

Part of the reason locals are so furious with the plans is fears the move could lead to, longer travel times, higher ticket prices, and reduced accessibility to flights.

New Caledonia President, Alcide Ponga, issued a blunt verdict on the action: "It looks as if someone wants the death of AirCal."

Air Calédonie said it remained "mobilised to save a vital company for New Caledonia and design a viable recovery plan."

The flight disruption has also caused problems for tourism and hospitality businesses.

Many have already closed down due to the disruption, RNZ reported.

The airline was founded back in 1954.