As to be expected from Stuff they've taken a long standing rumour (it started several years ago when many back office functions were merged between Mt Cook and Air Nelson), added some opinions that look they're written by somebody who doesn't even know the difference between an ATR and a Q300, and thrown in some comments from Brent Thomas from House of Travel who regularly makes very confusing and incorrect statements about airlines to really create a train wreck of a story.
There is absolutely zero need to mere the airlines for jet ops to regional areas. Why anybody things there is shows a complete lack of understanding in the business. The fact they talk about Queenstown "successfully converting from turbo prop to jet operations" is something that's simply a comment with no basis. There are more ATR ops into ZQN now than there have ever been, and to improve frequency you've seen a constant migration from jets to turbo props.
Nelson can't support A320 ops right now as the runway is both too narrow and too short. A quote from the Nelson Airport master plan up to 2035 sums this up -
Discussions with current airline operators have informed us that Code C jets will not be considered for many years, and potentially beyond the horizon of the Master Plan. Nevertheless, Code C jets have been considered in the Master Plan to ensure we do not restrict this eventuality, should their introduction take place earlier.
So yeah nah. Nelson won't see A320s any time soon without major airport expansion.
There is also no need for jet operations into any other regional airports with the possible exception of TRG. The growth in traffic out of there means that they'll be looking to add a 3rd early morning TRG to AKL flight in the not too distant future. There then comes a point where questions could be asked about whether it makes sense to overnight an A320 to replace 2 x ATR flights within a 60 min period with a single A320 jet service. From a pure economics view that probably doesn't stack up, but it's the only route where it would ever be close to being justified.
So will an Air Nelson / Mt Cook merger with mainline happen? Yes it probably will. It makes sense in many ways. Is it for any of the reasons in the Stuff article? Absolutely not. That's an incredibly poor piece of journalism that shows the lack of knowledge of the sector by both the journalist who wrote it, and also by Brent Thomas.