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Old December 20th, 2005, 06:20 PM   #1
hkskyline
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MISC | Sri Lankan Airlines Wants Regional Hub, War a Worry

INTERVIEW - S.Lankan Airlines wants regional hub, war a worry
By Peter Apps

COLOMBO, Dec 19 (Reuters) - Sri Lankan Airlines believes it can turn the island into a regional air hub to tap a growing Asian market, its chief executive said on Monday, but any return to civil war could dent the carrier, already hurt by last year's tsunami.

Chief Executive Peter Hill said Sri Lankan -- 51 percent owned by the government, 44 percent by Emirates and the remainder by its staff -- was already tapping a growing Indian market but still had some way to go.

"We're the biggest foreign carrier into India bar no one," he told Reuters in an interview in his office, in Colombo's tallest building.

"We've made sure our flights from the Middle East arrive so they feed into connections to India. We need to get back into Australia and South Africa before long. Otherwise we will miss the boat."

Hill, brought in by Emirates after a joint deal with the Sri Lankan government in 1998, said Colombo's airport had the capacity to become a regional centre, but that the national carrier had been hit by some high-profile setbacks.

A devastating attack by Tamil Tiger rebels on the airport in 2001, a year before a ceasefire halted two decades of war, destroyed half the Sri Lankan fleet. As the airline clawed its way back, the 2004 tsunami severely reduced tourist arrivals.

"The low point was losing half the fleet," Hill said. "Shortly after came 9/11 and the whole world stopped flying. We looked and said, if the world is going to stop long-haul flying, then India is on our doorstep. Now, in the last three years, India has overtaken Europe as our largest inbound market."

LARGER FLEET?

While Indian traffic grew, the tsunami, coming just after Christmas at a time when many book their holidays, delivered a major setback for tourism.

Nearly a year on, tourist bookings from Japan and Europe were still 10 to 15 percent lower than last year.

"We had our best year ever in 2004," Hill said. "If we didn't have the problems, the perceptions of an ongoing conflict, and if the memory of tsunami wasn't in everyone's minds, we could have quickly developed into a hub after 2004."

The tsunami cut the airline's profit for the financial year to March 2005 to 1.37 billion rupees ($13.42 million) from 55 billion rupees the previous year, he said. In the current financial year, the airline would again make a profit, he added.

In an ideal world, Hill said he would like to expand his current fleet of 14 long-haul jets -- currently all Airbuses -- to 20 or 25, possibly including Boeing Co. aircraft, and create a true regional hub in seven or eight years.

Given high fuel and aircraft costs, however, he said that this would take time.

With Sri Lanka's peace process looking increasingly rocky and violence increasing in the minority Tamil north and east, some analysts fear a return to war, with a devastating impact on the economy, tourism and Sri Lankan's ground services to other airlines at Colombo airport.

"It would impact on everything," Hill said. "Carriers wonder whether they should continue their operations or put it on hold. That has an impact on arrivals, ground handling and catering, plus our own operations, if no one wanted to come here. We've seen it all before."

Before making any long-term commitments such as aircraft purchases, Emirates would also want to know in the next four to six months if its joint agreement with the government would be extended beyond its current end date in March 2008.

"If the government wants to enter into a new agreement with Emirates, I'm sure they'd be delighted to talk," he said. "We've told them we've got to make decisions like this fairly quickly."
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Old December 21st, 2005, 02:29 AM   #2
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It has been a very rocky few years....with very little help from their business partners Emirates
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Old December 21st, 2005, 02:40 AM   #3
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Yeah, idiots in Sri Lanka last month voted equally idiotic hamfisted communists and nationalists into power stifling any attempts made for peace with the rebels. The present government will no way allow devolution or a federated state. The country will return to war. If you ask me, hopefully another round of fighting will teach the nationalists a damn good lesson.

That said, I REALLY hope Sri Lankan succeeds... not so long ago, there was talk of opening a second runway and terminal at Katunayake Airport... I think the highway is/will be in place... only that to come now.
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Old December 21st, 2005, 04:28 AM   #4
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Sri Lanka has always amazed me. It's interior is beautiful and it has some of the greatest beaches in the world, especially those on the southern part of the island. In fact, even though it has had a simmering conflict between Hindu Tamils and the Buddhist majority govermnment it still has managed to maintain a fairly decent tourist industry.

In fact, when the Indian Ocean Tsunami hit earlier this year, no other than the ex-Chancellor of the German government Helmut Kohl was on vacation on the south coast.
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Old December 21st, 2005, 05:06 AM   #5
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i certainly hope they do expand, sri lanka is definitely a nice country to visit with much to offer, its ppl are very cogenial and educatated and really deserve a break for all the stuff that has happend to them in the last 30 years.
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Old December 21st, 2005, 06:11 AM   #6
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Quote:
Originally Posted by shaun
Yeah, idiots in Sri Lanka last month voted equally idiotic hamfisted communists and nationalists into power stifling any attempts made for peace with the rebels. The present government will no way allow devolution or a federated state. The country will return to war. If you ask me, hopefully another round of fighting will teach the nationalists a damn good lesson.

That said, I REALLY hope Sri Lankan succeeds... not so long ago, there was talk of opening a second runway and terminal at Katunayake Airport... I think the highway is/will be in place... only that to come now.

i wouldnt blame the citizens entirely for rajapakse, the tigers really are getting out of hand but this si definitely a setback on all fronts. crossing my fingures hoping for a peaceful resolution.
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Old December 21st, 2005, 04:45 PM   #7
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Sri Lanka is so beautiful, I hope peace will come soon for them.
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Old December 26th, 2005, 02:54 AM   #8
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I wonder whther the SL Govt will renew EKs contract?? What do you think??

If UL leased 3 more A320s they could connect India more making CMB a true hub.

Hopefully they will do well.

Now, does anyone have pics of the new terminal??
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Old December 26th, 2005, 08:51 PM   #9
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My friend, I found this pic from airliners.net..........
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Old June 21st, 2006, 06:27 AM   #10
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Another reason not known to all is that Emirates, now having quite a monopoly of SriLankan, is not very keen on SriLankan to expand, thinking that their business will be in jeopardy, if SriLankan, is able to successfully take some of their Australian/European/Asian business. I personally think, that Emirates has been a kind airline to help SriLankan, but the time has come, where SriLankan can manage on its own, and doesn't need another company to help.
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Old June 21st, 2006, 03:11 PM   #11
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is emirates investment portfolio or foreign direct? i was under the impression that they only had a minority stake in Sri lankan, if thats the case I dont see why Emirates would have that much say in the companies affairs.
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Old June 22nd, 2006, 07:46 AM   #12
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Quote:
Originally Posted by nitzomoe
is emirates investment portfolio or foreign direct? i was under the impression that they only had a minority stake in Sri lankan, if thats the case I dont see why Emirates would have that much say in the companies affairs.
They either have a 48 or 49 percent stake in SriLankan, which make them have a huge say in what SriLankan's next step is. The Chief Executive of SriLankan, Peter Hill was working for Emirates, but when Emirates bought the stake, he was transferred to SriLankan
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Old June 23rd, 2006, 04:12 AM   #13
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And people wonder why the US only allows non-US citizens to own 25% of US airlines.
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Old June 24th, 2006, 04:22 AM   #14
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Emirates (EK) has management control and a stake in UL. But the govt still has the majority stake in UL and has the last say about EK's future in UL. I think that the EK should continue on, they know how to sustain an airline. However, I would hope govt trys to get UL to serve more destinations (ie Australia and Europe).
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Old June 24th, 2006, 04:30 AM   #15
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Quote:
Originally Posted by lordvader
Emirates (EK) has management control and a stake in UL. But the govt still has the majority stake in UL and has the last say about EK's future in UL. I think that the EK should continue on, they know how to sustain an airline. However, I would hope govt trys to get UL to serve more destinations (ie Australia and Europe).
When you have management control, which EK has of Sri Lankan, you can stop them from flying the lucrative Kangaroo run between Britain and Australia.
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Old June 24th, 2006, 04:31 AM   #16
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the trouble for Sri Lankan airlines will come when the private Indian airlines start competing the sky even further.. especially in the international sector towards the west. However like the article says tapping into the far east and the South African market might prove helpful
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Old June 24th, 2006, 04:37 AM   #17
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Quote:
Originally Posted by Nick in Atlanta
When you have management control, which EK has of Sri Lankan, you can stop them from flying the lucrative Kangaroo run between Britain and Australia.
Yes you are right but thats why I said the govt should try to persuade EK to get UL to serve more destinations. They could make it a contract clause or something.
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Old June 24th, 2006, 04:43 AM   #18
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Quote:
Originally Posted by shaun
Yeah, idiots in Sri Lanka last month voted equally idiotic hamfisted communists and nationalists into power stifling any attempts made for peace with the rebels. The present government will no way allow devolution or a federated state. The country will return to war. If you ask me, hopefully another round of fighting will teach the nationalists a damn good lesson.
Or more so because many idiots didn't vote based on the 'suggestions' of you- know-who, who can never be made to see the bigger picture. Now we all got what we wanted. Great going !
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Old June 24th, 2006, 04:44 AM   #19
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Quote:
Originally Posted by lordvader
Yes you are right but thats why I said the govt should try to persuade EK to get UL to serve more destinations. They could make it a contract clause or something.
It's pretty degrading for a country (Sri Lanka) to have to ask an airline that flies the UAE flag (Emirates) to please allow Sri Lankan to fly more lucrative routes.

@Fusionist: It will take a while for some of the new Indian airlines to get up to speed, but when they can compete with all the European airlines that fly into India they will do extremely well transporting a billion Indians all over the world. The airport infrastructure will need some enourmous investment, too.
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Old June 24th, 2006, 04:55 AM   #20
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Quote:
Originally Posted by Nick in Atlanta
@Fusionist: It will take a while for some of the new Indian airlines to get up to speed, but when they can compete with all the European airlines that fly into India they will do extremely well transporting a billion Indians all over the world. The airport infrastructure will need some enourmous investment, too.
But it is happening fast. SriLankan Airlines main market in India is linking the southern part of India to the west, Gulf, Singapore and probably Australia. But now BA has increased its direct service to Chennai and Bangalore, and private Indian airlines won the sky to fly from the Gulf to destinations in Kerala. I could be wrong but one of the private budget conscious Indian based airline is also doing or plannig to do Chennai - Colombo.

And the Indian cities like ( Bangalore and Hyderabad ) are building new airport to increase capacity. So the decisions which UL makes at this point will be very crucual. The second runway is a must.
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