AirAsia Bhd Wants to Operate in Sri Lanka

14th Nov 2017

Malaysian-based budget airline AirAsia Bhd wants to set up operations in Sri Lanka and has already made a strong pitch to the government in Colombo. One that might be “too good to refuse”.

According to media reports in Sri Lanka (Sunday Times), AirAsia is willing to inject substantial investment into the operation and only wants an air operator certificate and to exercise unused bilateral rights out of Sri Lanka.

Basically, this would mean that the Sri Lankan government wouldn’t have to invest anything and that in return it could gain a lot.

The delegation from AirAsia, lead by Group Head of Network and Regulatory Affairs Dilhan Haradasa, presented its idea to the Cabinet Comitee on Economic Management (CCEM), where they made an hour-long presentation to a comitee headed by Sri Lankan Prime Minister Ranil Wickremesinghe.

One of the attendees said they were “impressed” by AirAsia’s pitch:

Everything will be privately funded. They will bring in five aircraft in the first year, and 25 in five years. There will be two in Jaffna and two in Mattala. They said they will bring in tourists to meet the government’s five million target and they showed glowing statistics of other places they operate in. Each tourist they flew in now had a daily spend of US$160. They promised to raise it to US$200 in two years.

An industry official said:

They have the capital, the aircraft and the expertise. This will increase arrivals, foreign investment and allow Sri Lankans to travel, while posing a massive threat to SriLankan Airlines. They will compete directly on many routes.

There are also reports that AirAsia could be “stealing” SriLankan Airlines staff to prepare for entry into the market.

One problem for AirAsia could be the fact that they went around Sri Lankan Public Enterprise Development Minister Kabir Hashim. The man in charge of SriLankan Airlines is reportedly less than happy that AirAsia has went straight to the cabinet and not to him first.

He said:

Before going to the CCEM, they should have spoken to me. This has implications for SriLankan and it is worrying me.