Sri Lanka’s civil aviation sector to be developed under international standards through PPPs

Sri Lanka’s civil aviation sector to be developed under international standards through PPPs

A Sri Lankan government official has been quoted in the media as saying that the country’s domestic air services will be developed in compliance with international standards with the involvement of the private sector under a Public Private Partnership (PPP) model.
A senior official of the Transport and Civil Aviation Ministry has told the Business Times that foreign and local air service operators are to be attracted for the improvement of local services under this new initiative.
The Civil Aviation Authority has reportedly been directed to formulate a request for proposals for this purpose in consultation with the Public Private Partnership (PPP) unit of the Treasury.
Transport and Civil Aviation Ministry is to regulate air service operators’ standards and the fares to be levied by them.
When this matter was taken up for discussion at the Cabinet Committee on Economic Management (CCEM) meeting, it has been decided that domestic services should be open to foreign and local competitors alike.
Transport and Civil Aviation Minister Nimal Siripala De Silva has reportedly said the Ministry has decided to develop domestic airports for the use of civilians and identify the airports that need further development.
The Minister has said the World Bank has agreed to provide funding for the development of civilian airports.
It has stepped in to guide the Sri Lankan Government’s development of its domestic aviation sector, and to determine the potential for involvement by the private sector into the industry,
An “Options Study for Private Sector Participation in the Development of the Domestic Airports Sector in Sri Lanka” was commissioned by the Public-Private Infrastructure Advisory Fund (PPIAF) of the World Bank.
The study has been carried out by a team consisting of members from the World Bank and ICF Consulting Services Hong Kong Ltd with active participation from the Sri Lankan Government.
With the exception of Mattala International Airport (MIA) (which was only commissioned in 2013), the remaining 14 domestic airports were previously owned and operated directly by the government before being transferred to the Civil Aviation Authority, and subsequently AASL.
These airports were all utilised by the Sri Lanka Air Force (SLAF) during the country’s civil conflict.
The SLAF is the operator of most of these airports; there are also civilian aviation services run by private sector operators on a small scale.
There are a number of companies offering plane and helicopter charter services to several airports, such as Cinnamon Air, Helitours, Simplifly and Air Senok.
Inbound tourism is expected to grow from 1.5 million in 2014 to 5.4 million in 2035, and translated into number of tourist passengers (counting in and out airport movements) at BIA airport of 3.1 million (in 2014) and 10.8 million (in 2035).
Further growth is expected Sri Lanka’s civil aviation gets PPP wings soon from Sri Lankan travellers and passengers in transit, the study has revealed.
Most of the growth is expected to be driven by tourist demand.
Demand from Sri Lankan nationals is expected to grow from 2.5 million in 2014 to over 5.2 million in 2035 which is in line with projected growth in GDP per capita in Sri Lanka.
The potential domestic aviation activity is expected to rise from a base level of 135,000 airport passengers in 2014 to 307,000 in 2021, before declining to approximately 198,000 in 2024 as improvements in road networks come in place.
Thereafter, the consultants have predicted that domestic aviation growth will resume, providing there are no further significant improvements in surface connectivity towards some 350,000 passengers by 2035.
The analysis suggested that five airports have the highest level of development potential: Bandaranaike International Airport – in order to facilitate direct transfers for international passengers arriving into Sri Lanka; Mattala International Airport – in order to capitalise on existing infrastructure assets and to enable continued growth within Sri Lanka’s most popular tourism region; Sigiriya Airport – in order to provide easier access to key tourism destinations within the ancient Cities region; Hingurakgoda has been identified as alternative airport in the region, Batticaloa Airport – in order to provide quicker access to Sri Lanka’s east coast and upcoming tourism destinations in the region; and Jaffna Airport – in order to provide quicker access to the north of the country.

OSL take:

The growth potential outlined in Sri Lanka’s civil aviation sector by World Bank report indicate new opportunities opening up for investments. The fact that the Sri Lankan government is looking at developing the civil aviation industry through Public Private Partnerships (PPPs) would see strong investment opportunities for foreign investors.

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Article Code : VBS/AT/06122017/Z_3

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