The state-run airport operator said the cost of rebuilding the airport to make it viable again for commercial airlines was too high.
“It would cost around 250 million kronor ($31 million),” said vice CEO Karl Wistrand. “We at Swedavia have said that we’re not prepared to bear that investment. This means that we’re gradually going to wind down the airport operations.”
Ryanair, Wizz Air and Gotlandsflyg are among the airlines currently using the airport.
Trade unions and staff have been informed of the move, which will affect a total of 102 workers at the airport.
A routine inspection of the airport’s taxiways in November revealed problems with the ground on which the airport is built.
All heavy traffic, including flights run by budget carrier Ryanair, has subsequently been rerouted to the larger Landvetter airport.
Swedavia said it had decided to focus on increasing capacity at Landvetter rather than revamping City Airport.
“The traffic is already going there and it has worked,” said Wistrand.
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“There are plans to extend Landvetter. It’s possible some of the investments there will be brought forward.”
City Airport manager Annika Nyberg said she did not know if Ryanair would agree to a permanent move to Landvetter.
“An airline will decide for itself where it’s worth flying from. There will be a dialogue between the companies and Landvetter,” she said.