Financial Times

Domestic airlines seek fare hike
Domestic airlines operating passenger flights between Colombo and Jaffna want to increase fares due to losses caused by the severe competition and the reduction in traffic with the opening up of road travel.

"They have submitted a request to raise fares," said the Director-General of Civil Aviation H.M.C. Nimalsiri, who is also Chief Executive Office of the Civil Aviation Authority.

"We're considering the request given the difficulties faced by the domestic operators and also being mindful of the interests of the passengers as well." The operators want to raise the economy class fare for a return ticket to Palaly to Rs 9,000 and business class to Rs 11,000, Nimalsiri said. An economy class return ticket now costs around Rs. 7,500.

Fares fell to around Rs 4,500 earlier this year when the competition on the Jaffna flights hotted up with the entry of Expo Aviation and Serendib to challenge Lionair which had long held a virtual monopoly on this route.

At the time it was feared that with all three operators struggling to fill up the flights in a shrinking market, a price war could cause all to lose money.

The three operators subsequently reached a consensus on a common pricing structure. The civil aviation authorities also imposed a limit on the number of seats each operator could offer to ensure all three had enough business. Nimalsiri said the market was not big enough to support more than three operators.

The present level of traffic is only enough for one operator full time for three or four flights a day. But with the three operators, the aircraft utilisation is not over two hours for a single operator, resulting in high overheads and losses. The operators need to enhance aircraft utilisation hours in order to improve their margins and are keen to fly to other destinations in the island, catering mainly to tourist traffic.

The civil aviation authorities have approved domestic flights to other airfields. Meanwhile SriLankan Airlines has conducted demonstration flights to the Victoria reservoir and the Nuwara Eliya lake using a Cessna 206 amphibious aircraft acquired from Turkey.

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