Aer Arann has reduced flights on its Dublin-Shannon service by half and revealed that it filled less than a dozen seats in a 50-seat plane on a typical morning.

The disclosure of losses on the Shannon route comes just five months after the service was introduced. In addition, it is the second time in nine months that Aer Arann has miscalculated the likely support for its regional services.

The company's spokeswoman declined to reveal the extent of the losses but its managing director, Mr Pádraig O'Ceidigh, said it could not sustain losses on the route.

In November, five public-service contracts granted to the airline by the Government were cancelled after Aer Arann's losses outstripped the €11.04 million in State grants to run the services.

Such public-service obligation payments compensate for losses on unprofitable but essential services. Aer Lingus previously provided the service but withdrew it when its business model changed.

Pending a new tender process, the company was granted a temporary contract to continue operating the routes linking Dublin with Kerry, Galway, Sligo, Knock and Donegal.

New contracts secured after that process to operate the Kerry, Galway and Knock services will be worth about €40.65 million in State grants to the company in the next three years.

The Shannon service reduced by the company is not subject to a public-service contract.

The cancellation terminates an early-morning departure to Dublin from Shannon and a return flight at night. The company said: "Demand for the morning flight has been much lower than anticipated, leading to the decision to rationalise the service."

Mr O'Ceidigh added: "The service was initially introduced in response to a clear demand for a service which would allow a day's business to be done in Dublin."

When the service was introduced, airport company Aer Rianta said the business community and tourism agencies in Shannon had been "very vocal" in expressing their support.

The spokeswoman said the service was introduced in competition with a rival Aer Lingus service, which left Shannon at about 8.30 a.m.

A spokeswoman said the Aer Arann flights left Shannon initially at 7.30 a.m. and were brought forward to 7 a.m. when it emerged that demand was poor. She said the evening service received good support.

The company said that its afternoon service on the route would remain in place.