Sharp Airlines' air service from Warrnambool and Portland airports will cease from June 30 with the company blaming a drop in passenger numbers.
Full refunds will be given to those who've booked flights on the Essendon to Warrnambool and Portland round-trip service after June 30
Managing director and chief pilot Malcolm Sharp said the number of passengers using the airline had halved since the early 2000s when the company's first flights out of Warrnambool took off.
A second attempt at a regular passenger service from Warrnambool in 2015 failed to reach the heights of 18 years ago when they were getting 15,000 to 16,000 passengers a year.
Mr Sharp said it was only getting about 8000 passengers and it needed 12,000 just to break even.
"It just doesn't stack up," he said.
He said it had lost passengers from what were traditionally big users such as Alcoa and Iluka Resources because the way those companies conducted their business had changed.
Mr Sharp said there were no plans to restart the passenger service in the future unless there was a business case for it.
Glenelg Shire Council mayor Anita Rank said the decision to cease the service was disappointing but said it would now look to another regional airline to fill the gap.
"Daily air services connecting to Melbourne are critical to the south-west's essential services, business and growing our economy and visitor markets," Cr Rank said.
In a joint statement from Glenelg and Warrnambool City council, she said the councils and state government had worked closely with Sharp Airlines in recent months in an effort to build successful strategies to keep the service viable and secure long-term markets.
"Whilst the collaboration was successful in building patronage, it did not translate into sufficient passenger numbers to make the route commercially viable into the future," she said.
"There will be no jobs impacted at either the Portland or Warrnambool airports as a result of Sharp's cessation of the Warrnambool-Portland- Melbourne service."
Earlier this year, the company sent a strong message to the region, telling them the future of the airline was in their hands. "Use it or lose it," the company's chief executive officer Dallas Hay said.
Mr Hay warned in March that despite a $300,000 support package from the state government and Glenelg and Warrnambool City councils in January, passenger numbers had not increased enough to guarantee its future.
Mr Hay said that for years the company had been subsidising the Warrnambool-Portland-Melbourne service.
A statement from company on Monday announcing the closure of the service, said the airline had been associated with western Victoria for about 28 years.
"It's a decision that has not been taken lightly," Mr Sharp said.
Despite a 12 to 18-month campaign by the airline to increase the patronage and stimulate the market, the service had become economically unviable, he said.
"I would personally like to thank our many loyal customers who have supported us over the years," he said.
"I take a lot of pride in the fact we have delivered you safely to your destination over some 20,000 flights in sometimes adverse conditions."
He also thanked the Victorian Government, Glenelg Shire and Warrnambool City Council who helped to keep the service in the air.
He said none of the full-time staff employed with Sharp Airlines would be affected by the change.
Sharp Airlines operates 15 aircraft servicing five states in the airline and fly-in-fly-out market, and carries over 100,000 passengers and 1.5 million kilograms of freight a year.
With bases in Adelaide, Melbourne (Essendon), Sydney (Bankstown), Launceston and Hobart, Mr Sharp said the company's network continued to expand.
Sharp Airlines is continually growing and looking for opportunities both in the regular public transport, charter and FIFO markets.
For refunds, contact the reservations team on 1300 556694.
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