UL Cargo plans to increase contribution to Srilankan’s overall revenue by 15-20%
„Looks to contribute 15 to 20% to overall revenue „Gearing up to capitalize on China e-commerce boom „In the midst of carrying out feasibility for own freighter „Stressed need for export warehouse facility expansion „Loss due to airport closure US $ 8
As the debt-laden national carrier is on the lookout for avenues to reduce its losses, Srilankan Cargo yesterday shared its plans to boost contribution to the airline’s revenue.
Acknowledging that cargo is increasingly becoming a critical factor in improving the company’s balance sheet, Srilankan Cargo said it aims to push its contribution to the overall revenue by at least 5 percent.
Speaking to the media in Colombo yesterday, Srilankan Cargo Head Chamara Ranasinghe pointed out that the need and want of the company was to ensure the cargo arm contributes approximately 15 – 20 percent, a ‘great task’ that is mandatory to fulfill.
“No more are the days where there are high fares and business class passenger factors. What contributes to the belly of the aircraft is very critical. Therefore reaching the aspired contribution level is a great task and an exercise we want to do,” expressed Ranasinghe.
Srilankan Cargo for the past three years has been contributing 11 percent to the overall revenue of the national carrier. Due to various changes in the schedules, scrapping of routes, especially with Europe taken off the list since last winter, and heavy increase of passengers by most of the Middle East carriers, a dip in revenue has been witnessed. According to Ranasinghe, the changes led to a situation where capacities became higher than the demand for air freights, putting a number of markets, including Sri Lanka, under immense pressure. Srilankan Cargo, for the financial year 2015/2016 saw its yields crash by almost 15 percent.
“We have lost Europe and we plan on getting back some interline partnerships and doing our own feasibility on a freighter which could link Sri Lanka and Europe. We may have an intermediate market like the Middle East to get into Europe to keep the route profitability,” he elaborated.
In an effort to retain and improve the market share, Srilankan Cargo aims to capitalize on the emerging e-commerce boom in China, an industry world over $ 4 trillion and expected to grow significantly in the coming tears. “This is where the money is. High yield and would give us a god freight factor,” asserted the Head of Cargo.
Srilankan Cargo has not tapped into this segment as yet due to capacity issues, but expressed confidence in reaping benefits from the same if it has its own freighter and inking a deal with an interline partner.
Partaking in China’s ecommerce growth spurt would allow the cargo arm to regain part of the opportunity missed with Europe, and further increase yield to the Middle East, opined Ranasinghe. It was also stressed that mandatory by mid next year is an expansion of the export warehouse facility which has currently fully optimized. A feasibility study on the sought expansion is being carried out and firm plans would be revealed in the third quarter.
It was also pointed that the airport closure has resulted Srilankan Cargo to incur a loss of US$ 8 to US$10 million, largely due to the inability to connect to the evening flights.