Tata eyes loss-making SriLankan Airlines: Airline intel platform

In the recent past, successive governments have looked for potential investors to run the country’s loss-making national carrier, SriLankan Airlines, but there have been no takers so far.

No one came forward with an offer, given the financial status of the company. Some were willing to consider such a proposal but only if the past losses are settled and they can make a fresh start.

However, a new potential investor, who has ambitions to be a big player in the region and even the world, is tapping on the door, according to airline sources. That is India's conglomerate giant, Tata Sons.

The talk of the town these days is that Tata Sons which took over India's Air India last year and rebranded the airline is showing some interest. In addition to Air India, the conglomerate group also owns Vistara, Air India

Express, and AirAsia India.

In February, shortly after the takeover, Air India under the management of Tata Sons, made the largest plane order in commercial aviation history by upgrading its fleet with 250 planes from Airbus and 220 from Boeing. Industry experts estimate the cost at about USD 85 billion.

SriLankan Airlines currently flies to the Indian airports of Bangalore, Chennai, Delhi, Hyderabad, Kochi, Madurai, Mumbai, Thiruvananthapuram, and Tiruchirapally from Colombo. During the Buddhist pilgrimage season, it flies direct to Bodh Gaya, Varanasi, and soon to Kusinara. Based on seat availability data, SriLankan Airlines currently commands a 63.21% market share on the country pair. Air India has the second biggest presence in Sri Lanka -- India sectors, with a 13.68% market share.

"If Tata acquired a full or part stake in SriLankan Airlines, adding in Vistara's 4.69% market share, its airlines would provide 81.58% of all seats on the country pair, which may or may not raise competitive concerns," according to a report from ch-aviation, a platform that provides airline intelligence and analysis reports.

Earlier, a senior Ports and Aviation Ministry official told a Parliament Oversight Committee that the government was planning to sell two entities of SriLankan Airlines -- SriLankan Airlines Ground Handling and SriLankan Catering to one buyer. "The government hopes to raise approximately USD600 million by selling 49% stakes in both profitable entities. However, that amount would only cover around half of SriLankan Airlines' existing debt".