carriers advised against fare hike
The Civil Aviation Authority has advised domestic airlines against
a fare hike they were seeking to cope with high costs owing to stiff
competition for the shrinking number of passengers.
not in favour of a fare increase," said H.M.C. Nimalsiri, Director-General
of Civil Aviation and Chief Executive Office of the Civil Aviation
Authority. "We have asked them to consider other means of coping
with high costs."
All three domestic
airlines operating passenger flights between Colombo and Jaffna
had applied for permission to increase fares because of losses caused
by the severe competition and the reduction in traffic with the
opening up of road travel.
the request was considered given the difficulties faced by the domestic
operators while being mindful of the interests of passengers. "We're
still studying it but don't think it is advisable because when you
increase fares there could be a decrease in the number of passengers.
That's not the way to promote air transportation."
The CAA had
asked the operators to see how they could improve yields with better
aircraft utilisation, which was now not good enough. "No aircraft
is used for more than five hours a day on average," Nimalsiri
said. "The aircraft are on ground most of the time so their
operational costs are high and they need a higher yield for break
want to raise the economy class fare for a return ticket to Palaly
to Rs 9,000 and business class to Rs 11,000. An economy class return
ticket now costs around Rs. 7,500.
to around Rs 4,500 earlier this 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
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.