Business

PM to grant aviation sector wish list

The requests for concessions made by the Civil Aviation Authority’s (CAA) and Sri Lanka’s aviation and tourism sectors as a whole have reportedly received a favourable response from the Government.

Reliable sources indicated that Prime Minister Ranil Wickremesinghe had last week agreed to reduce airport costs as requested, and a Cabinet proposal to this effect is likely to be presented soon.
Wickremesinghe had arrived at this decision following a high-level discussion with tourism and aviation sector stakeholders, including the CAA and the Ministry of Finance.

As exclusively reported By The Sunday Morning Business on 13 June, CAA 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.
Speaking to The Sunday Morning Business on Friday (5), CAA Chief Executive Officer H.M.C. Nimalsiri welcomed the move.

“We welcome any form of reduction as it would support the tourism and the civil aviation industry of the country.”

Speaking further, he added that there has been a reduction of 1,000 aircraft movements since the Easter incident and passenger movements have witnessed a drop of 230,000 amongst which 40% are locals and 60% are internationals.

As reported exclusively by The Sunday Morning Business on 26 May, Sri Lanka 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.

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 Nimalsiri.

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.

Now, Prime Minister Wickremasinghe is likely to reduce the embarkation levy to somewhere around $ 40 per tourist, which is the amount requested by the CAA.

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 aviation industry had also requested for fuel concessions. The request for concessions on aviation fuel came following years of lobbying by the industry to introduce a transparent aviation fuel pricing formula. CPC is the sole aviation fuel provider in the country, and Ceypetco aviation fuel is expensive.

However, according to sources, a reduction in aviation fuel price is also likely to take place.