Counting the cost of lost longhaul links

SriLankan Airlines’ Europe pullout is a setback but other carriers have moved to fill the gap.

Sri Lankan Airlines’ move to cease direct flights to Rome in May 2016, followed by Paris and Frankfurt in November, have been met with mixed reactions from the trade, even as Sri Lanka no longer boasts direct connections to Europe apart from London.

For Mahen Kariyawasam, managing director, Andrew the Travel, the pullout from Sri Lanka’s key European markets is the biggest issue that the trade has been grappling with over the past months. “We have lost 5,000 seats on these sectors.”

However, while admitting that the discontinuation of these flights is affecting inbound tourism, Sasi Ganeshan, a travel agency CEO, said “the national carrier’s share of traffic from Europe was marginal compared to airlines like Emirates or Qatar Airways”.

According to official data, SriLankan Airlines’ traffic from Germany accounted for 21.9 per cent of the market in 2015/2016, compared with 72 per cent by the Middle Eastern carriers; likewise for the Rome and Paris routes.

Furthermore, arrivals for January to February 2017, part of the peak season, picked up 6.4 per cent year-on-year. For this period, arrivals from Germany were flat at 27,183, France up 0.4 per cent to 24,575 and Italy grew 0.9 per cent to 7,808.

Industry observers pointed out that KLM and Austrian Airlines’ resumption of direct services to Colombo in winter 2016 and 2015 respectively have partly cushioned the blow of SriLankan’s departure from Europe.

Still, Paddy Withana, chairman of state-owned Sri Lanka Tourism Promotion Bureau (SLTPB) expressed that German arrivals are likely to take a hit as tourists prefer quicker connections.

SLTPB managing director Sutheash Balasubramaniam said the European markets had stayed robust for Sri Lanka and they continued to patronise the country even during the years of instability (1983-2009), but acknowledged the need for SriLankan Airlines to restructure.

Losses have been unbearable for SriLankan Airlines which reported an accumulated loss of Rs12.1 billion (US$80 million) in 2015-16. The airline’s rental cost (it doesn’t own aircraft) rose 23.4 per cent to Rs20.1 billion in 2015/16.

Exacerbating the national carrier’s woes is the closure of the country’s main gateway, Bandaranaike International Airport, from 08.30 to 16.30 daily, effective January to April this year.

The national carrier is now placing greater focus on short- to medium-haul routes with planned increases of flights to Delhi, Mumbai, Kuala Lumpur and Bangkok, as it started taking delivery of its six Airbus A320neo order in February this year.

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