Jetstar warned yesterday it may have to raise airfares and cut flights, which could lead to job losses, if Newcastle Airport didn't back down in a stoush over the fees.

As a 10-year contract draws to a close on September 30, the Newcastle and Port Stephens-owned airport wants to increase the landing fee it charges Jetstar by $1.70 per person - an amount that would allow the airport to break even on the cost of landing a Jetstar flight for the first time since 2008.

Tourism Hunter chairman Will Creedon accused the airline of game-playing and said the "community of the Hunter would not be held to ransom".

"The Hunter is a very strong destination and I have no doubts any void left by Jetstar would be quickly taken by Virgin and others," he said.

Mr Creedon described Jetstar's stance as a disappointment because the community had supported the budget airline when it established its business in the Hunter 10 years ago.

Jetstar Australia and New Zealand chief executive officer David Hall said the proposed 50 per cent increase on current fees was "unreasonable, unprecedented and will challenge the viability of our routes".

Newcastle Airport chief executive Paul Hughes said it was the first increase the airline had been hit with in 10 years.

"We've been losing money on their flights because we've spent $30 million over that 10 years putting additional infrastructure in place," Mr Hughes said.

Jetstar now transports 850,000 people through Newcastle a year. Jetstar has 200 employees in Newcastle and a 70 per cent market share of airport traffic.

Mr Hall rejected Newcastle airport's argument, saying it was "short-sighted" to only look at the money generated though airline fees.

"'They're making a profit of $5 million a year . . . and are enjoying the traffic that Jetstar is generating," Mr Hall said.

But Mr Hughes said if it wasn't for those profits, ratepayers would be funding the airport.

"We don't expect the people who park cars here should have to subsidise Jetstar," Mr Hughes said.

The Hunter Business Chamber hoped both sides came to an agreement.