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AirAsia pitches LCC to Sri Lanka
November 17th 2017
The AirAsia Group conglomerate could soon be adding another subsidiary to its stable of carriers – AirAsia Sri Lanka. Read More »
According to a report in the Sunday Times, Sri Lanka’s prime newspaper, AirAsia Group delivered a detailed presentation to the Cabinet Committee on Economic Management in Colombo last week, saying the group would fund the venture’s start-up costs.
If the planned went ahead, AirAsia is proposing to base five aircraft in Sri Lanka during the first year of operations, growing to 25 aircraft during the fifth year. It said aircraft would be based in Colombo, Hambantota and Jaffna.
According to sources present at the pitch, AirAsia Group would accept 49% ownership of the venture, relinquishing the majority stake to the Sri Lankan government.
“Every button was pushed,” a source told the Sunday Times. “Everything will be privately funded. They will bring in five aircraft in the first year, and twenty five 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.”
If the venture will go ahead as proposed remains unclear at this stage. Senior government officials have expressed concern that AirAsia setting up base in Sri Lanka could be the nail in the coffin for ailing state-controlled SriLankan Airlines.
Kabir Hashim, Sri Lanka’s public enterprise development minister in charge of SriLankan Airlines, said he was “not opposing [AirAsia’s bid]” but he was “concerned” because “proposals of this nature have to be carefully evaluated to determine the viability and ramifications on the bleeding national carrier.”
AirAsia Sri Lanka would be issued a local AOC, providing it with near endless bilateral traffic rights currently not used up by SriLankan.
