A Regional Aviation Hub: What Will It Take?
By Rohan Samarajiva PhD
Bandaranaike International Airport — just concrete and jetways will not do
The President’s programme calls for Sri Lanka becoming a regional aviation hub. We are already an incipient aviation hub for the southern Indian continental region, including the Maldives. How did we get here? What more will it take?
How did we get here?
First, the government reformed airport operations with the creation of Airport Aviation Services Limited (AASL) as a government owned company in 1983. That structure was a distinct improvement from what existed before, and the airport was for several years superior to its Indian peers (though not to Singapore, Bangkok, etc.). Airports compete with other airports in the region. To stand still is to fall back.
The Rajiv Gandhi International Airport in Hyderabad, now ranked one of world’s best, underlines the need for reforms in the management of the Bandaranaike International Airport (BIA). While the physical infrastructure has been upgraded in the past few years, the organisation is now showing the ill effects of abuse of power for political and venal purposes and the creeping recolonisation by government mindsets.
Concrete and jetways do not an aviation hub make. An aviation hub is one where transit occurs. Many passengers come to a hub airport not because they want to visit the country where the airport is located, but because they wish to catch another plane. The airport makes money from the services it provides these transit passengers and to the airlines that carry them.
The people from the country where the airport is located benefit because the transit traffic justifies more direct flights to a range of destinations.
The BIA is an incipient hub because even today SriLankan Airlines brings in a lot of passengers who are travelling to/from India. Some of these people do not leave the airport at all, connecting to flights that leave immediately after they arrive. Others do leave the airport, staying in hotels for a few hours or longer, before coming back to catch a flight. This (as well as the attraction of Indian tourists to Sri Lanka) was made possible by the initiative taken by the then Minister for Economic Reforms, Milinda Moragoda, back in 2002 to allow visa-on-arrival to Indian visitors.
Unilateral liberalisation of the visa regime yielded immediate benefits not only in terms of tourism (India rising to become the largest market, with one of the highest growth rates), but also made Colombo an incipient regional aviation hub. (See Table 1)
The India-Sri Lanka Comprehensive Economic Partnership Agreement (CEPA) process which was initiated through a 2003 joint study report with major contributions from the Ministry for Economic Reform, Science and Technology was intended to lock in these (and other) benefits.
The report yielded immediate benefits. The Sri Lanka-India routes were liberalised in 2004 with permission being granted to Indian private airlines to fly into Colombo. Constraints were lifted on flights into India by airlines from Sri Lanka.
The combined results of the visa and market liberalisation can be seen in the rapid increase of transit passengers in Colombo, pulling ahead of India’s principal gateway airport, Mumbai (See Tables 2 and 3).
Table 3 shows that the rapid growth of transit passengers plateaued by 2008, along with overall passenger traffic, indicating that the momentum of 2002-04 is running out.
For inexplicable reasons, the government balked at signing the CEPA. It has so far failed to implement a good regulatory regime for BIA, still governed by archaic monopoly arrangements for ground handling services.
The unpardonable and avoidable mess of Mihin Lanka has cast a pall on the entire industry.
The management turmoil caused by trying to renationalise SriLankan and the resultant financial crisis have made it even less likely that it could be weaned from its reliance on ground-handling profits to reduce losses from flying operations.
What will it take to advance?
Hubs cannot be decreed into existence. They emerge because the economics are right. They disappear when the economics are wrong. In the 1950s and 1960s, Singaporeans came to Colombo to connect to flights to Europe. Since the 1970s, we have been going to Singapore to connect to flights.
The rise of Singapore was based on massive investment, good regulation and public-private partnerships. If Colombo is to rise again, we will need a laser-like focus on the increasing investment through public-private partnerships and in creating a modern regulatory regime for airport and aviation services that will facilitate investment and efficiency.
Some of the investments are being done; others need to be done. Currently, aircraft have to carry extra fuel when coming to Colombo because the nearest alternative airports (Male and Chennai) are more than one hour away.
The completion of the Mattala Airport will remedy this problem. But there is still the need for a second runway, arguably even more important than the alternative airport.
BIA does not have enough gates to justify being called a hub. Construction must begin now of another terminal at BIA. All this requires investment. It is best that this comes from willing private investors, rather than from the government’s meager budget. The solution is public-private partnerships, on the lines of what is being done in the major international airports of India.
Hyderabad becoming the world’s fifth best airport in 2010 is a wake-up call. Even if the early results are going to be disappointing it is imperative that Colombo subject itself to assessment by credible third parties, like the major Indian airports.
Colombo’s future as a viable regional hub airport depends on continuing progress on reforming the airport and introducing competition. Infrastructure reforms cannot change as governments change.
The actions that made Colombo an incipient aviation hub were taken by previous UNP governments and the 1994-99 PA government (the privatisation of SriLankan Airlines in 1998).
It is heartening that the current President has made the aviation hub a centerpiece of his second term. The Mahinda Chinthana Idiri Dekma lays out the vision of what is to be achieved, but is thin on how it is to be achieved.
The ‘how’ is spelled out in the “Sri Lanka National Congress’ Agenda for Influencing the Government,” the manifesto of Milinda Moragoda’s 2010 campaign. The relevant actions include:
- See India as an opportunity, not a threat and engage to create Sri Lankan jobs
- Enter into a Comprehensive Economic Partnership Agreement with India
- Facilitate public and private sectors to work together in a win-win partnership
- Rationalise archaic rules and regulations and bureaucratic red tape that obstruct and hinder progress and economic development.
One hopes that this will be the foundation of a bipartisan consensus on the next stage of making Colombo an aviation hub, and that the consensus will be translated into the right actions and consistency of purpose.
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What are the advantages to being a hub? Very few I would say.
The Indian transit passenger syndrome started after the LTTE attack on the airport in 2001. Suddenly Sri Lankan airlines found itself facing empty planes because of the collapse of tourism. It filled the empty places with Indian laborers working in the Gulf by offering them discounted prices; it is still cheaper to get a flight Riyadh-Colombo-Mumbai than a simple Riyadh-Colombo flight. The country however gains little financially from these ‘tourists” who often are earning as little as $100 a month in the Gulf, and thus have nothing to spend. They do however vastly increase the numbers, which makes those on government salaries very happy as they can use those numbers to justify the salary.
umm. .. in sri lanka public servants don’t need to justify a salary, they have a job for life. but planes/passengers in transit = a landing fees at airport, refuelling, and that kind of income, it is better than nothing
I THINK THIS ARTICLE IS WELL THOUGH OUT. HOWEVER I TEND TO AGREE WITH STEVEN ALSO. TRANSIT DOES NOT MEAN ONE ONLY CHANGES PLANES FOR ONWARDS FLIGHTS BUT ALSO SOMETIMES DISEMBARKS FOR A DAY OR FEW HOURS. WHAT CAN THEY DO IN MATTALA DURING THAT TIME?
THE WHOLE CONCEPT OF TRANSIT HAS TO BE LOOKED AT. WE HAVE BEUTIFUL BEACHES, SINHARAJA, ANURADHAPURA CLOSE TO KATUNAYAKE. RUNWAYS CAN BE EXTEND INTO THE SLAF PROPERTY.
RAJAPAKSE PLANS HAVE HIDDEN AGENDAS AND WILL NOT WORK. I TRAVEL ABOUT 25 TIMES A YEAR AND I KNOW THE DIFFERENCE
Government should tax these transit passengers, may be through the airlines that bring them to Colombo. These Indians, in very large numbers, dirty our airport and make a mess of it. They through arrogance and ignorance give scant regard to the airport rules and Sri Lankans. If we can’t get an income from these transit passengers we don’t want them in Colombo
Taxing part we need to examine carefully. there is so much people willing to pay while there are other choices.
On the other hand, I agree with you 100% on dirty basters making our airport smelliy.
Taxing part we need to examine carefully. there is so much people willing to pay while there are other choices.
On the other hand, I agree with you 100% on dirty basters making our airport smelly.
Focus on a political solution and embarace the Lankan diaspora. They will pump the money into the country. We can beat Indians on software as Lankan diaspora kids are western educated and we can bring in multi languages call centres (eg: Danish, Swedish, German, French etc) which India or China can’t think of. Have a long vision and develop the Jaffna Airport and watch we beat Singapore in the long run. But before that likes of Dr Silvas must be out of politics.
Do you really think a country with a population of 20 million(38 billion $ GDP) could beat India with a billion population? Try beating Karnataka (48 billion$ GDP) in India let alone Tamilnadu (70 billion $ GDP). Talking of beating India in software, about 25% of software engineers in silicon valley are Indians and about 7% of companies there are run by Indians. You have to do a lot of work just to compete with indians let alone beating them.
good plan buddy, great attitude. just give up now !
population of Singaore 4 million,GDP $239 Billion ( 1960 = $0.65 Billion in 1960 sri lanka GDP = 2 times that of Singapore). stop being so negative! “you’ll never beat the LTTE militarily” that was last year.
I am not being negative..I understand but you have to understand that india wasn’t a open economy until 1991. It will be hard for us to develop as Singapore because of our close proximity to india. Investment would come to places with huge population (cheap labour) according to current trends. Instead of fighting with indians we should cater india, which is going to be a huge market by 2040 atleast according to goldman sachs and carnegie endowment.
Good job Rohan Samarajiva PhD. Keep writing Sir.
The writer is correct in that one cannot pass a decree making an airport an international hub for its the economics that will determine that status. However, building a second airport in Mattala, Hambantota has two aspects to it; both positive and negative.
As Colombo does not have a 2nd runway it could well serve as the 2nd airport which is a requirement to be a hub. However, Mattala is in the middle of nowhere. Hambantota, its closest town is still a backward place with primitive facilities at best (albeit the new port) . Unless international airlines are going to use Mattala it can never be a 2nd airport. As it is, Colombo doesn’t even handle 1/10th of the passengers handled by Changi Singapore. Then what sort of air traffic will Mattala get? Changi handles major carriers like United, SQ, Qantas, Emirates, JAL, BA, Air France, Lufthansa to name a few. Being located smack in the center of the Australia-Europe flight path has benefited Changi immensely over the last 30 years. Its duty free shopping too is top notch though its terminal building is ageing and rather claustrophobic .
Unless Mattala can entice major carriers with low landing costs and other incentives it may become another white elephant. But in the SL context, it may well be termed a ‘success’ as its the politics and the 10% cut that determine matters such as these.
The writer is to be commended for his characteristic outspokenness. As he says, hubs are created by good economics — I would add to that another key requirement: positive perception by consumers, in this case airline passengers and airlines themselves.
In the past decade, several airlines pulled out of Sri Lanka — not simply because incoming passenger numbers were low due to the prolonged war, but because SriLankan Airlines was behaving in an arrogant, monopolistic manner. It was hogging air routes even when it has no capacity or intention to use these (a real case of a dog in the manger). KLM and British Airways phased out of Sri Lanka due to persistent harassment by SriLankan Airlines
To this date, SriLankan enjoys a complete monopoly over passenger handling at the BIA/KIA — its underperforming and sometimes incompetent staff are causing regular delays and much suffering to passengers. When queried, other airlines say they are forced to use SriLankan ground staff and pay high price for a poor service. This does not nurture a good perception or reputation for BIA/KIA as a regional hub.
So there is much work to be done before a hub can happen. Ending the SriLankan Airline monopoly and poor ground handling will be a good starting point.
Thansk Chee Lanka, you have a good knowledge
A Regional Aviation Hub!
I went through the above article with great interest and I wish to give my sincere comments as follows:
Well there is no point criticizing things which has happened in the past or at present! I think the idea and the support from our Hon. President Mahinda Rajapaksa and Hon. Minister Chamal Rajapaksa to set up an establish a regional aviation hub in our beautiful paradise is a wonderful assert to our nation. We all as Sri Lankan´s we should be proud how our CMB (VCBI) international airport functions. It’s up to high standards where flight safety and navigation is concern and infrastructure when you compare other airports in Far East, Asian region, South America and West and East Africa.
The question is how do we develop and approach the carriers to use our Aviation Hub´s! It’s very simple now that we have all tools in our hand to offer all facilities starting with CMB (VCBI) to Mattala (Hambantota International) with 3500(M) runway with CAT I and CAT 11 approach facilities with 24Hrs. operations.
CMB (VCBI) Bandaranaike International Airport (BIA)
Airport is perfect with runway 04/22 with 3350(M) effective runway and the infrastructure and 24Hrs. operation without any night band and noise restriction for Annex 16 chapter 2 aircraft.
How do we attract CMB international to the other international carriers, charter carriers, budget carriers such as (Low cost operation), and Cargo carriers, AOG Slots and Maintenance, Re-fueling (Tech-Stop) and, Transit operation and VIP aircraft! It’s very simple procedure. We need the right man at the right desk with global aviation contacts and experience.
- I understand there are 3 home base carriers in CMB such as UL/MJ and Expo Aviation plus regular operation with other carriers. First questions is how many available airport slots day 1 to day 7 available at CMB international airport in W/S seasons! Looking at these availability and (Slots) very carefully and with a close study with other moments in the region and over flying capacity we should attract the right carrier with the available slot to offer with right pricing! In-order to obtain volume of business to keep CMB international occupied up to 92% moments (W) and (S) seasons.
- Then pricing have to be brought down! Such as landing charges with (MATOW), parking charges (MATOW), ramp handling and traffic handling charges, CUTE charges and Terminal charges. Allow and give concession to another two Private Ramp Handling and Traffic Handling companies to offer services with UL with competition in ground handling and offer the best handling pricing accordingly in the open markets. Today all carriers need quality BUT cheap services such as ground handling is concern to keep on time performance and aircraft rotation! Carriers do not care, who services them if the price and the quality is correct according to the IATA Ground Handling Agreement Annex B! All services are done accordingly I am sure CMB international airport will be a profit making tool when you compare other airports around the globe.
- Also very important point! The leading aircraft manufacturers are Boeing and Airbus! According to my knowledge, we only have Technical and Maintenance facility for AOG support, daily checks, transit checks, A Checks, C checks for ONLY Airbus units from A320/A330/A340 only with IAE V2500 A1-A5, RR Trent 772B-60 and CFM56-5C2-4 and for FK27.
We need to expand Technical support to Boeing such as New Generation aircraft. Boeing B737-300/400/500/B737-700NG to 900NG and B747-400 to B777 aircraft, this will give us more tools to market our hub 92% moments for a day at CMB and keep MATTALA (Hambantota) International Airport as alternate 1 for CMB international in case of an emergency and diversion!
MATTALA (Hambantota) International Airport: 3500(M) runway
This is a fantastic move by our President Mihinda Rajapaksa and Hon. Minister Chamal Rajapaksa. Congratulations Sir. Perfect planning for the second international airport in our beautiful paradise. I thank you once again.
We have so much of opportunities such as marketing tools to covert this Airport as a profitable tool. Such as:
- To set up a Boeing Maintenance facility for C & D Checks!
- Set up a Cargo hub and attract Cargo Airlines such as DHL/UPS/TNT
Aviation and provide regional home base at Mattala plus storage cargo
facility.
- Introduce Mattala as Altanate 1 to CMB airport.
- Facility and space to set up a Simulator either Air Bus or Boeing
- Facility and space for 2 Flying schools
- Offer attractive pricing for low cost and charter operation.
- 2 Catering companies
Best Regards,
(AJ) Iranjan Carson Gajasinghe Jr.
Dear Carson
I sincerely hope and pray that Horapakse brothers will appoint you as the next Chairman of Civil Aviation. Don’t become another Tiran Alles please (who did deals with the LTTE).
carson! 5 words, you are a bloody idiot.
These projects are very attractive & interesting to note, when materializing
will it be corrupt free which i doubt as their wont be transperancy in the
deals.
Milinda Morogoda cannot be trusted as he had many shady deals before
like mercantile Bank, Srilanka Insurance, Lanka Marine services, Vat scam
etc in fact he is a fox in sheeps cloth.
nice blog article about this topic. this makes me ask a question though, so i dont really understand the relation of this topic and your entire blog. it just doesnt go together. But nontheless i found it very readable. Regards, Rizwan