The real issue is the lack of population in the area. Whakatane has a catchment from the 2013 census of 34,400. If you take a 1/4 of the population is probably closer to Rotorua than the Whakatane airport that is about 26,000 people for the market.
Take a Beech 1900 with 19 seats at a 65% load factor at say 13 seats to break even for a single return flight per day needs over 9000 people to travel every year. That is 35% of the population has to fly at least once every year for an airline to survive.
The rough economics just does not work for a large operation! A small local operation with low overheads (cheap airframe, low staff numbers and low wages) may be able to survive but it won't be with an expensive TB700 or Kingair. Maybe a Caravan or a Navajo?