Indonesia AirAsia will be ceasing its Bali Denpasar-Darwin service on 30 April.
The move is to ensure that the carrier "remains competitive" and to best utilise its fleet, said a spokeswoman.
"We will enhance the frequencies on popular and high-yield routes, and are looking more at increasing domestic services now," she added.
These includes services between Jakarta and Bali as well as Singapore and Kuala Lumpur.
The low-cost carrier started services between Bali and Darwin in 2010, but cut its frequency from six to four flights weekly last year.
The low-cost carrier operates a fleet of 17 Airbus A320s.