Managing director Andrew Flintham confirmed late on Tuesday (1 September) Tui would stop offering holidays to Laganas from Thursday (3 September).
Flintham said the decision was based on some clients’ failure to adhere to social distancing rules and other Covid safety measures.
He also called on government to redouble track and trace processes, advocate airport testing and adopt a "more nuanced" approach to travel corridors by making them regional.
"Laganas is a popular resort with young people who traditionally holiday in large groups of friends," said Flintham.
"The health and safety of our colleagues and customers is our primary concern and recent cases shows that some customers are not following social distancing and Covid safety measures.
"It is therefore the right thing to do [to halt trips] to protect and reduce a now identified potential risk to others by no longer offering holidays to this specific resort."
Flintham added recent cases in Wales had "highlighted a demographic of customers" who had recently returned from Zante and tested positive.
"As the only airline that flies between Cardiff and Zante, it has allowed us to understand trends that may also be seen in other areas of the UK," said Flintham.
Welsh health minister Vaughan Gething has confirmed six clusters of cases, now amounting to in excess of 30, have been linked to flights to and from the island.
Nearly 200 people are reported to now be self-isolation after "at least" 16 passengers on a Zante-Cardiff Tui flight tested positive for Covid-19.
Flintham added: "We believe that with good track and trace processes, testing at airports and a nuanced approach to regional travel corridors, customers can continue to travel safety."
Tui has confirmed holidays to all other resorts in Zante bar Laganas will continue as normal.
Any customers impacted by Laganas cancellations will receive a full refund.
