Government Asks Money-Losing SriLankan Airlines To Launch New Routes To Europe

Filed Under: SriLankan

After losing hundreds of millions of dollars over the past several years, SriLankan Airlines has been working on shrinking their way into profitability, or at least has worked on minimizing losses.

Well, now Sri Lanka’s government is asking the airline to launch additional long haul routes.

Government requests additional Europe flight

Sri Lanka’s Tourism And Aviation State Minister has revealed that SriLankan Airlines has been requested to consider resuming flights to either Frankfurt, Germany, or Paris, France. Both of these routes were cut in late 2016. The government is even willing to subsidize these routes if need be… or so they say.

As the minister is quoted as saying:

“We have started discussions with the national carrier on the need to resume services to either Frankfurt in Germany and/or Paris in France. These are hubs for the rest of Europe, and direct flights will boost arrivals.”

The government wants to attract seven million tourists and $10 billion in tourism earnings by 2025, compared to 2.3 million tourists and $4.4 billion in tourism earnings in 2018.

It’s even noted that a big tour operator out of France and Belgium said there would be increased demand if there were more direct flights. This tour company brings over 2,000 tourists each year to Sri Lanka, and hopes to double that number by 2021.

While that’s not insignificant, that’s also hardly the basis for a new route.

SriLankan Airlines still losing money

It goes without saying that SriLankan Airlines has had a tough year, given the terrorist attack in Sri Lanka last year.

Even prior to that, though, the company was reporting huge losses. For example, in the year ending March 2019, the company reported an operating loss of about 175 million USD.

This has come after the company has taken many initiatives to reduce losses. For example, in 2016 the airline allegedly paid 170 million USD just to cancel four A350 orders, and at the same time, the airline started leasing some of their A330s to Pakistan International Airlines.

SriLankan Airlines’ A330 business class

This gets at the challenge with national airlines

SriLankan Airlines’ current situation is the perfect representation of the challenges that so many money-losing national airlines face, whether we’re talking about Garuda Indonesia, Kenya Airways, Malaysia Airlines, South African Airways, or so many other airlines.

Airlines almost seem to be a political pawn. When it’s convenient they’re used to promote tourism and they’re told to expand, while at other times they’re blamed for huge losses and are forced to scale down. This essentially means that all of these airlines are incapable of making long term plans, since the goals for the airlines are constantly changing (which is why the company spent 170 million USD canceling aircraft orders).

There’s nothing wrong with a national airline losing money if it brings tourists to the country and is considered a net positive. The problem is that everyone has to be on the same page, and that’s almost never the case.

Bottom line

I’ll be curious to see if SriLankan Airlines does indeed launch flights to Frankfurt and/or Paris. Currently London is SriLankan Airlines’ only European destination, and I have a hard time imagining that SriLankan Airlines would be making any money on the route.

If the government is actually willing to directly subsidize the route then it might still be a net positive, but in reality, I suspect this “subsidy” comes in the form of the government simply bailing the airline out when they’re next cash-strapped.

Comments
  1. Drop the $50 international embarkation tax and $60 UL overseas sales surcharge and I might consider a stopover on a future trip.

  2. Sri Lanka is a nice place, universally acclaimed as such (unlike India).
    But the airline is definitely not one run with international standards (grumpy flight attendants. Maybe American standards?) so not a great ‘face’ for Sri Lankan hospitality which is so warm

  3. Actually I imagine that SriLankan do quite well on the London route. I have flown it over six times in the past ten years (in economy and in early December) and every time the flight has been full. Other family members that take it have also said the flight is always full. And it is not like SriLankan has cheap tickets on the LHR route either…

  4. Why do you think they don’t make money on the London route? Given the history it seems like the most logical route to make money

  5. @James My experience was just the opposite. Very friendly very professional. I don’t know whether I was just lucky,or you were unlucky.

  6. I guess I can understand the rationale of the government. Smaller European destinations such as Zurich (Edelweiss) and Warsaw (LOT) at least have seasonal direct flights to Colombo – and they seem to be profitable. Therefore it is quite remarkable that the two largest countries in Europe (apart from the UK) have none, not even a seasonal one.

    They are currently served by a codeshare operated by Qatar, which is not bad in terms of connections, but still includes a transfer at Doha.

    Bottom line I think Paris is worth to try, perhaps first on a seasonal basis. Frankfurt is more difficult, because it‘s just a LH/Star Alliance hub and neither the largest city (which would be Berlin), nor the market with highest purchasing power (Munich) in Germany.

  7. Ben, LHR-CMB is usually full. The company were already thinking about resuming services to eurpoe and adding new routes such as Sydney,Nairobi,Kathmandu and Ho Chi Minh. They are also considering A330-900 Neo’s to replace the ageing A330-200s. Sri Lankan Airlines has already cut a significant amount of loss in the past year by moving offices and administration from Colombo to Katunayake (where the airport is located), aswell as fuel saving from A320 Neo aircraft, renegotiations regarding tax and with banks and the engineering contract. Please consider all of the information available free on the internet when wrting such articles.

  8. I flew one-way many times from CGK-BAH on business class for around $450… that’s around 9hrs of total flight. Cheap AF!

  9. Sri Lankan did operate into Sydney many years ago as Air Lanka they are one of the old school carriers
    Was told they will restart the service
    Mid year
    I flew Sri Lankan MEL/CMB return enjoyed the flight
    Good Luck Sri Lankan will see you in Sydney soon

  10. I totally agree with you on this post especially the part about “The Challenge with National Airlines”. I also notice the similarity between all the money losing national airlines and that is that they all come from countries with developing economies. Thus, governments of these countries, in a rush to expand their economy, typically use airlines as pawns by telling them to launch flights to famous cities like London and New York. The airlines will almost certainly never make a profit on these routes. These governments need to stop managing the airlines because it only leads to corruption and mismanagement. If these governments want to stop having to constantly bail out their money losing national airlines, my advice to them is to LEAVE THEIR NATIONAL AIRLINES ALONE AND HIRE INDUSTRY EXPERTS AND VETERANS.

  11. The guys are right, as a regular user, LHR-CMB is always full, both in Y and C. The direct fare is usually around 50% higher than taking a connecting flight. If UL can’t make money on this route, then they might as well close down altogether.

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