Business

Aviation sector requests lowering of airport charges

No positive response from Finance Ministry yet

SL has highest embarkation levy in APAC: CAA

By Charindra Chandrasena

The Civil Aviation Authority (CAA) has submitted a request to the Ministry of Finance for a reduction of airport costs to ensure international airlines continue to fly to Sri Lanka despite dwindling passenger numbers following the Easter Sunday attacks.

A lowering of ground handling charges and the embarkation levy along with concessions on aviation fuel are the three primary requests which have been made by the CAA, according to its Chief Executive Officer, H.M.C. Nimalsiri.

“We have forwarded the proposals directly to the Treasury and also to State Minister of Finance Eran Wickramaratne, but I also contacted Minister of Transport and Civil Aviation Arjuna Ranatunga for his opinion.”

The Budget 2019 increased the embarkation levy to $ 60 from $ 50 to generate foreign exchange earnings and the earnings are credited to the Consolidated Fund. According to Nimalsiri, Sri Lanka now has the highest embarkation levy in the Asia Pacific region.

When contacted, Treasury Secretary Dr. R.H.S. Samaratunga stated that he was aware of the proposals sent by the CAA and the first round of discussions were already held with Minister of Finance Mangala Samaraweera and relevant officials.

“Not just the aviation sector, almost every sector has been affected by these Easter incidents. We will look into the proposals positively, but nothing has been finalised yet,” he said.

As reported exclusively by The Sunday Morning Business on 26 May, Sri Lanka had lost a staggering 41 flights in the first month after the Easter attacks, with 11 different international airlines reducing their flight frequencies to the island.

While none of the major airlines have reduced frequency, they have reduced the airline capacities, deploying smaller aircraft to Sri Lanka to cut costs. Overall, air connectivity with seven countries has been affected, namely China, Hong Kong, India, Malaysia, Oman, Russia, and Thailand.

Industry sources told us that these concessions, if granted, would certainly ease the burden on the airlines. According to the sources, terrorism happens all around the world. But if the loads are less for a very long period of time, the airlines will not see any justifiable reasons to keep flying here.

The request has specified that ground handling charges be reduced by at least 50%. Ground handling is servicing of an aircraft while it is on the ground and parked at a terminal gate of an airport. Charges of ground handling vary depending on the size of aircraft.

The request for concessions on aviation fuel has come following years of lobbying by the industry to introduce a transparent aviation fuel pricing formula. Ceylon Petroleum Corporation (Ceypetco) is the sole aviation fuel provider in the country and Ceypetco aviation fuel is expensive.

Emphasising the importance of implementing the three proposals, industry sources noted that if the airlines reroute their aircraft to other destinations, all relief provided to the tourism and hospitality sectors would be futile.