Air Seychelles repositions and will restructure |18 November 2011

However it will continue some of its long haul flights temporarily. Air Seychelles will be entering into code share agreements with Etihad Airways and other airlines as the business requires for the uptake of passengers affected by the discontinued flights and seats vacated by Air Seychelles.

Air Seychelles’ chief executive Bram Steller said capacity on flights into and out of Seychelles has been increasing rapidly over the last few years. The take up by market demand has not been forthcoming as fast. As a consequence, flights of various airlines generate a lower cabin factor (% of seats occupied) than necessary for profitable operations.

“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,” Mr Steller said.

The situation has become worse as the Falklands charter contract of the UK’s Ministry of Defence was lost in September this year. Therefore, the two Boeing 767-200 aircraft were returned to the lessor in October before the expiry of the lease.

The government has had to step in with financial support over this last year. This situation has become unsustainable for government from its budgetary standpoint.

Air Seychelles has remained loss generating on its international routes since the start of the financial year in April 2011 and the projected losses have only become worse over the last few months as the forward bookings have stagnated and remained significantly under last year’s bookings. This is partly due to severe financial crisis being faced by many European countries.

In order to reduce its losses, Air Seychelles will cease its London flights to Heathrow via Italy’s Rome and Milan after January 8, 2012.

Meanwhile it will cancel some flights in between on this route when there are low booked loads.

Flights to Paris-CDG will be scaled down as of January 10, 2011 from five to three weekly flights operating in both directions with the preferred night schedule. It will cease operations to Paris by March 25, 2012.

Following recent negotiations, Etihad Airways has accepted to fly passengers already booked on Air Seychelles flights out of Paris, London and Milan at the rates already ticketed by Air Seychelles and via Air France to Paris.

A meeting was held in Abu Dhabi last week between Etihad Airways and Air Seychelles officials to discuss further co-operation between both airlines about better joint fares and an eventual codeshare agreement.

Etihad Airways has offered very attractive pro-rates to Air Seychelles on its international network operating to the US, Europe, Pakistan, India, China, Bangkok and Australia. In return, Air Seychelles has reciprocated by offering Etihad Airways seats and special fares on its destinations.The agreement between Air Seychelles and Etihad Airways is expected to be signed next week.

As part of the national airline’s restructuring process, the contracts of several expatriate captains, engineers and ground operations staff will be terminated. This will also affect staff at European stations.

Through a comprehensive retrenchment plan with the ministry responsible for employment, Air Seychelles will also be redeploying Seychellois staff to other departments within the airline and to other sectors in the national economy.
A similar team as the one who helped government’s own retrenchment programme in 2008-2009 will work closely with Air Seychelles to re-position staff and to have a smooth transition for redeployment.

Mr Steller also announced that Air Seychelles will immediately be making the necessary arrangements to plan the return of the three Boeing 767-300 aircraft, which cost the airline some €1 million monthly in fixed costs.
A high level delegation from Seychelles will soon meet the aircraft lessor to organise the early return of the existing B767-300 aircraft.

For the profitable regional operations, Air Seychelles is looking for a new B737-800 as the most appropriate rightsized aircraft to enhance its regional operations. Potential flights to India and Abu Dhabi for Asian connections with Etihad Airways to bring in more diverse tourism are being explored.

In particular, the South African market has seen a healthy growth for which this Christmas season an additional six flights have been scheduled.

At the same time, Air Seychelles will apply extra emphasis to its profitable domestic operations and handling of aircraft, passengers and cargo.