Malaysia's AirAsia wants to set up bud­get car­rier here

Pre­sen­ta­tion made to Cabi­net com­mit­tee headed by PM, but Min­is­ter Hashim says he was by­passed

Sunday Times (Sri Lanka) - - FRONT PAGE - By Namini Wi­jedasa

Malaysian low- cost air­line AirAsia has made a strong pitch to set up a bud­get car­rier in Colombo with a 51 per­cent stake for the Sri Lanka Gov­ern­ment. But Pub­lic En­ter­prise De­vel­op­ment Min­is­ter Kabir Hashim, in charge of SriLankan Air­lines, claimed he was com­pletely by­passed.

A team from AirAsia made an hour- long pre­sen­ta­tion to the Cabi­net Com­mit­tee on Eco­nomic Man­age­ment (CCEM) on Wed­nes­day. While Min­is­ter Hashim is a mem­ber of the group, he said he had nei­ther been in­formed such a pitch would be made nor sent any back­ground in­for­ma­tion. It had, how­ever, been in­cluded in the agenda. He did not at­tend the meet­ing.

“I am not op­pos­ing it but I am con­cerned,” he told the Sun­day Times. “Pro­pos­als of this na­ture have to be care­fully eval­u­ated to de­ter­mine the vi­a­bil­ity and ram­i­fi­ca­tions on the bleed­ing na­tional car­rier.”

The CCEM meet­ing was headed by Prime Min­is­ter Ranil Wick­remesinghe. Among the team that made the pre­sen­ta­tion was Dil­han Haradasa,


who is AirAsia’s Group Head of Net­work and Reg­u­la­tory Af­fairs. An at­tendee called the pitch “im­pres­sive”. The Malaysian car­rier pledged sub­stan­tial re­turns at no cost to the Sri Lankan Gov­ern­ment.

“Ev­ery but­ton was pushed,” he said, on con­di­tion of anonymity. “Ev­ery­thing will be pri­vately funded. They will bring in five air­craft in the first year, and twenty five in five years. There will be two in Jaffna and two in Mat­tala. They said they will bring in tourists to meet the Gov­ern­ment’s five mil­lion tar­get and they showed glow­ing sta­tis­tics of other places they op­er­ate in. Each tourist they flew in now had a daily spend of US$ 160. They promised to raise it to US$ 200 in two years.”

The AirAsia pre­sen­ta­tion was heavy on num­bers and showed huge po­ten­tial in­flows of cap­i­tal into Sri Lanka via the air­line’s op­er­a­tion. It pledged low ticket prices, thereby mak­ing for­eign travel ac­ces­si­ble to mid­dle class Sri Lankans.

Civil Avi­a­tion Min­is­ter Ni­mal Siri­pala de Silva raised ob­jec­tion s ay i n g the Ban­daranaike In­ter­na­tional Air­port had no ter­mi­nal space to sup­port the num­ber of air­craft AirAsia hoped to bring in. But the Malaysian com­pany said low cost air­craft had dif­fer­ent ter­mi­nal re­quire­ments and that it was will­ing to com­mit to help build a ter­mi­nal. “The air­line said it had the ex­per­tise and tem­plate to put up pre­fab­ri­cated struc­tures within a few months,” an­other source said.

In re­turn for its in­vest­ment, AirAsia Sri Lanka will have a Sri Lankan air op­er­a­tor’s cer­tifi­cate and ex­er­cise the un­used bi­lat­eral rights out of the coun­try. “We have ne­go­ti­ated these pretty well and have un­lim­ited rights to In­dia, Male, Kuala Lumpur, Sin­ga­pore and Bangkok,” an avi­a­tion in­dus­try of­fi­cial said. “This should be a wake- up call for SriLankan Air­lines.”

There are re­ports that AirAsia has al­ready started head- hunt­ing SriLankan Air­lines staff in a re­cruit­ment drive in prepa­ra­tion for a pos­si­ble en­try into the lo­cal mar­ket. At the same time, the prospect of at­tract­ing more tourists and run­ning a bud­get car­rier at zero Gov­ern­ment in­vest­ment is now un­der se­ri­ous con­sid­er­a­tion.

“They have the cap­i­tal, the air­craft and the ex­per­tise,” the of­fi­cial said. “This will in­crease ar­rivals, for­eign in­vest­ment and al­low Sri Lankans to travel while pos­ing a mas­sive threat to SriLankan Air­lines. They will com­pete di­rectly on many routes.”

Min­is­ter Hashim, mean­while, told the Sun­day Times he had not known about AirAsia— some­thing other sources spec­u­lated was un­usual. “The min­istry was not in­formed,” he main­tained. “Be­fore go­ing to the CCEM, they should have spo­ken to me. This has im­pli­ca­tions for SriLankan and it is wor­ry­ing me.”

“SriLankan’s air op­er­a­tor’s cer­tifi­cate is im­por­tant,” he said. “I use it as lever­age when­ever I try to part­ner the air­line with an­other en­tity. When this hap­pens, it can be­come a prob­lem. They should have a proper process.”

“I will prob­a­bly take it up at the next meet­ing but I don’t even have a piece of pa­per to go on,” the min­is­ter con­tin­ued. “They should have sent it to the line min­is­ter or min­istry and I would have asked SriLankan for a note on the im­pli­ca­tions. I can’t ob­ject with­out a piece of pa­per.”

The Min­is­ter re­it­er­ated that he was not writ­ing off the AirAsia ini­tia­tive but that it must be pre­ceded by an eval­u­a­tion, done jointly with SriLankan. The pro­posal also comes amid the on­go­ing liq­ui­da­tion of Mi­hin Lanka and a cabi­net de­ci­sion to ab­sorb its tow­er­ing debts. Its per­mit is also to be sold. Sev­eral other in­ter­na­tional bud­get car­ri­ers are ser­vic­ing Sri Lanka.

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