Air Seychelles is to terminate flights to Europe from the start of next year as it completes a major restructuring of its international network. The details of the route cuts follow just a matter of weeks after the carrier suspended its flights to Singapore and will mean it will be left serving just domestic and African destinations from spring 2012.

The economic climate, coupled with the loss of UK Ministry of Defence contract has hit the airline’s profits hard and despite boosting capacity to some of its key markets, loads have shown little change and forward bookings for the remainder of the winter 2011/2012 schedules remain below forecasts.

“Air Seychelles has seen its market share decrease continuously for the last few years. The result has been that profitability on the long haul routes of Air Seychelles for more than two years has dwindled from marginally profitable to serious losses,” said Bram Steller, Chief Executive Officer, Air Seychelles.

Air Seychelles’ European network currently comprises five flights per week between Mahé and Paris CDG and two per week to London Heathrow, one via Milan Malpensa and one via Rome Fiumicino. However, from January 8, 2012 the Italian and UK markets will no longer be served, while from January 10, 2012 Paris CDG frequencies will be cut to three a week and the route will be closed from March 25, 2012.

Rather than serve the European market in its own right, Air Seychelles is now likely to establish codeshare deals with international partners, including Etihad Airways which recently expanded into the Seychelles market with direct inks from its Abu Dhabi base and wider global connection opportunities.

Air Seychelles will now focus on its regional network and could actually introduce some additional destinations into its network on the African continent. It currently offers twice weekly flights to Johannesburg in South Africa and Mauritius and could boost frequencies on these routes, according to company sources, while also providing important domestic links to the island of Praslin.

One airline has already reacted quickly to Air Seychelles’ network cuts with Air Austral proposing its own flights between Mahé and Paris CDG during summer 2012. The carrier already offers flights between St Denis de la Reunion and Seychelles using a Boeing 737-800, but it is planning to offer a twice weekly link and onward sector to Paris CDG from March 27, 2012 using a Boeing 777-300ER.

The table above highlights just how much the market has changed over the past five years. Although O&D traffic is up on last year the travelling dynamics of passengers are clearly visible and this is what has hit Air Seychelles hard. For the year ending September 2006 the carrier carried an estimated 336,000 bi-directional O&D passengers and held a 61.9 per cent share of the traffic. In the last year this figure was just 278,000 with its hare slipping to 48 per cent. Its main challenge has come from Emirates Airline which has seen its own share of traffic increase from 9.3 per cent to 26.3 per cent in the five year period; traffic to/from Dubai is up a whopping 50.1 per cent in the past year to an estimated 56,000 O&D passengers following frequency growth.

With Qatar Airways also holding an 8.0 per cent share of the passenger traffic at Seychelles International Airport, the arrival of another major Middle Eastern network carrier in the form of Etihad Airways, has finally forced the airline to radically downsize its international operations and rethink its business model to ensure a sustainable future for the national carrier.