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Air Seychelles announced business transformation plan to safeguard long-term profitability

Posted 26 January 2018 · Add Comment

The plan, aimed at responding to rapidly increasing competition in the air travel sector, has been approved by Air Seychelles’ Supervisory Board and both shareholders, the Government of the Republic of Seychelles and Etihad Airways.

Jean Weeling-Lee, Chairman of Air Seychelles, said:  “The aviation industry is fiercely competitive and will become even more so in 2018 as some of the largest carriers begin flying to Seychelles. This transformation plan has been designed to restructure the Air Seychelles business to meet the challenges of the future while continuing to deliver strong results for the economy and people of Seychelles.” 
 
The Seychelles archipelago will see a major influx of inbound seat capacity in 2018.  In addition to airlines already operating to Seychelles - Turkish Airlines, Qatar Airways, Emirates Airlines, Etihad Airways, Kenya Airways, Ethiopian Airlines, Austrian Airways, Sri Lankan and Condor; British Airways has announced plans to launch flights from London to Seychelles in March, followed by Air France introducing services from Paris in May and the Swiss Edelweiss Air launching flights from Zurich in September 2018, creating overcapacity on Seychelles-bound services from Europe. This will create significant downward pressure on airfares and negatively affect the loads and forward bookings on Air Seychelles’ current three-per-week Paris operation.
 
To reduce the financial impact of such competition, Air Seychelles will consolidate its international network by suspending its Paris service effective 24 April 2018 and exit the two leased Airbus A330 aircraft out of the fleet.  As part of the network efficiency development strategy, and considering the high dependence on the Paris traffic feed, the airline will at the same time discontinue its Antananarivo service. 
 
Remco Althuis, Interim Chief Executive Officer of Air Seychelles, said: “The launch of competing air services from Europe to Seychelles will significantly impact Air Seychelles’ flights to and from Paris, which account for approximately 30% of total passenger revenue at the airline, making the route unsustainable in the long-term.
 
“After considering all the options, we have taken the decision to withdraw from both Paris and Antananarivo and refocus on our core strengths – our domestic and regional networks. Doing so will enable us to concentrate on more profitable areas of the business, while people in Seychelles will continue to have non-stop access to France and wider Europe through airlines that can operate at more efficient international scale than Air Seychelles.”
 
As part of this strategic transformation, Air Seychelles will replace its regional fleet of two Airbus A320 aircraft with the next generation aircraft in 2019, enabling the airline to offer greater levels of comfort while increasing seat capacities and reducing operational costs. In addition, the airline will concentrate on developing its domestic operations, including inter-island flights between Mahé and Praslin, scenic flight packages and island charters, which are set to play an increasingly important role as more international travellers visit the archipelago.
 
These developments will be coupled by a number of new cost-saving and revenue-generating initiatives in 2018, including projects aimed at strengthening non-airline areas of the business such as ground handling, cargo handling and engineering services. 
 
Mr. Althuis said: “The key differentiator of Air Seychelles has always been its creole spirit and exceptional service, and we will explore ways of building on this foundation while developing our offering to better meet the needs of modern travellers, who are increasingly looking for a more personalised travel experience. Our goal will be to restructure our cost base while retaining all the standout qualities that make Air Seychelles so unique.” 
 
This refocusing of the business will include a reduced workforce in cabin crew and pilots, as well as supporting flight and commercial roles. Air Seychelles will provide compensatory packages to affected staff as well as support with job searches and employment.
 
Mr. Althuis continued: “We fully understand how challenging these changes will be and we are establishing the optimum way of dealing with the transition. During the coming months, the airline management team will be working closely with the Supervisory Board, Etihad, and the Government of Seychelles to preserve as many jobs as possible and provide assistance to staff. Resizing the workforce to our changing business requirements is a necessary step to create a lean and efficient company.” 
 
Ambassador Maurice Loustau-Lalanne, Minister for Tourism, Civil Aviation, Ports and Marine, said: “As an island nation, we have always risen to the challenges placed before us by international economic forces, and I am confident that, with the full support of its stakeholders, our flag carrier will adapt to the winds of change. It is important that we take these tough but necessary steps at this time to safeguard the future of Air Seychelles.”
 
Robin Kamark, Chief Executive Officer Equity Partners, Etihad Aviation Group, said: “Etihad has a strong and close partnership with Air Seychelles and we continue to stand alongside the airline as it undergoes this crucial transformation. This strategic business plan has been developed to reflect the realities of the market today and place Air Seychelles in a strong position for further growth.”
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