Chapter 17

Civil Aviation Industry in Sri Lanka: Challenges and Solutions

In: Aviation Law and Policy in Asia
Author: Anusha Wickramasinghe
Type: Chapter
Pages: 326–341
DOI: https://doi.org/10.1163/9789004439580_018
Civil Aviation Industry in Sri Lanka: Challenges and Solutions
Anusha Wickramasinghe
Introduction
Aviation has become very important in the national, regional
and international spheres not just as a mode of transport
but as a major economic tool. According to facts and
figures provided by the Air Transport Action Group,
aviation created 65.5 million jobs directly and indirectly related
to tourism in 20171 . Interestingly, if aviation were a country, it
would rank 20th in the world in terms of gross domestic
product (gdp)2. Despite the importance of aviation, the
financial performance of airlines remains problematic
according to the International Air Transport Association 3.

1
Air Transport Action Group (atag), ‘Facts & Figures’ (atag, October 2018) <https://
www.atag.org/ facts- figures.html> accessed 5 July 2019.
2
Ibid
3
International Air Transport Association (iata), ‘Economic Performance of the Airline
Industry’ (I ATA, 12 December 2018) <https:// www.iata.org/ publications/ economics/
Reports/ Industry- Econ- Performance/ IATA- Economic- Performance- of- the- Industry- end-
year- 2018-report.pdf> accessed 5 July 2019.
Many airlines across the world ceased operations within
the past few years4. A number of governments are faced
with the challenge of finding strategic investors to support
their ailing national carriers. Sri Lanka is no exception—
past governments have proposed restructuring plans, but
they were never implemented. Indeed, civil air transport in Sri
Lanka is currently moving through severe turbulence.
Accumulated losses, overhead costs and poor decision
making are among the main reasons why the countries’
national carrier Sri Lankan airlines have been seeing
negative growth. Making things even worse, the Easter
bombings in April 2019 (On 21st April 2019, a series of suicide
attacks across churches and hotels in Sri Lanka killed more than
300 people) resulted in dozens of cancellations or changes in
travel plans of tourists, which had a huge impact on the ailing
national carrier. The government has been lobbying for
strategic partners for a few years, but no parties have been
4
MC01, ‘Next in the Bankruptcy & Restructuring Saga of European and Asian Airlines’ (Wolf
Street, 17 February 2019) <https:// wolfstreet.com/ 2019/ 02/ 17/ bankruptcy-
reorganization- european- and- asian- airlines/ >accessed 5 July 2019; MC01, ‘More Airlines
Collapse: Jet Air-ways India, Alitalia, WOW Air’ (Wolf Street, 17 April 2019) <https://
wolfstreet.com/ 2019/ 04/ 17/ more- airlines- collapse- jet- airways- india- alitalia- wow/ >
accessed 5 July 2019.
seriously interested. This chapter discusses the problems
faced by the Sri Lankan air transport industry and makes
suggestions for improvements. It begins by explaining the
geographical location of the country, which presents an
ideal setup for an aviation hub. Then it presents certain
facts and figures reflecting the cur-rent operations. Policy
expectations and lapses in practical implementation are
discussed next along with the current legal and regulatory
framework. The chapter will then embark on a discussion that
provides insights on keeping a national airline, proof that the
‘national carrier’ notion is a ‘regional’ problem, woes resulting
from the low cost experience, the resulting burden to the coun-
try and the experience of foreign direct investment. The
chapter concludes by making a few practical recommendations
about overcoming the situation.

Sri Lanka: a Few Statistics

Sri Lanka is located in a strategic position in terms of

aviation and maritime transport. As a country that heavily
depends on tourism, it depends on avia-tion as the key link
to tourists. The tourism sector accounts for 5% of Sri Lanka’s
national GDP5. Aviation has contributed to providing
employment directly and indirectly. According to the 2018 draft
annual report of the Civil Aviation Authority of Sri Lanka, a
total of 10.8 million passengers reached Sri Lanka, 54.6% of
whom were carried by Sri Lankan Airlines6. 34 international air
carriers operated to Sri Lanka in 2018, and IndiGo airlines,
Aeroflot/ Rossiya airlines (which withdrew completely after the
Easter attacks), Edelweiss airlines, Thai Air Asia and Chongqing
airlines commenced scheduled flights to Sri Lanka the same
year7.Two more airlines commenced services to Sri Lanka in
November.

5
Aneetha Warusavitarana, ‘All eggs in the tourism basket?’ (ADVOCATA, 22 May 2019) < https://
www.advocata.org/ commentary- archives/ 2019/ 05/ 22/ all- eggs- in- the- tourism- basket> ac-cessed 5 July
2019
6
Ananda Wimalasena, ‘Civil Aviation Authority of Sri Lanka, Draft Annual Report 2018’ (Civil Aviation Authority of
Sri Lanka, 28 February 2019) <https:// www.caa.lk/ images/ stories/ pdf/ annual_ report/ Draft_ Annual_
Report_ 2018.pdf> accessed 5 July 2019
7
ibid