Govt’s hope for Indian firms EOIs for SriLankan Airlines shattered.
By: Staff Writer
Colombo (LNW): Sri Lanka’s hope for Indian firms to take over the national carrier has become dim following the denial of prospective Indian bidders earmarked by the authorities, Indian news agency reports revealed.
“Interest is being shown by both aviation and non-aviation companies. They are based in many countries, including India,” Suresh Shah, Director General of Sri Lanka’s state-owned enterprise restructuring unit said
Tata Sons, Adani group and Emirates have been cited as possible suitors for SriLankan Airlines.
However Air India’s Managing Director and CEO Campbell Wilson denied that the airline is looking at buying SriLankan Airlines, the Hindu Business Line reported.
The Adani group too has denied interest in its emailed reply. InterGlobe Enterprises which owns IndiGo did not respond to a query, it added.
The Government has called for Expression of Interest (EOI) for the proposed divestiture of SriLankan Airlines three days ago as the island nation looks for at least U$ 500 million capital injection to make the airline viable, Aviation Minister Nimal SIripla De Silva said.
A prospective financial institution must have available investible funds and/or capital of at least US$ 300 million.
Subject to satisfying the stated criteria, the government invites body corporates, companies, firms, and any other legal entity or consortiums to apply.
SriLankan Airlines has 23 Airbus aircraft and flies to 39 destinations globally. It flies 77 weekly flights to nine cities in India.
Sri Lanka government has highlighted the access to the rapidly growing Indian aviation market to attract investors.
An investment opportunity teaser accompanying the bid document details the airline’s strengths such as its diversified network and dominant position in Lanka’s international traffic.
It pitches the Indian aviation growth story. Investment in SriLankan Airlines would give its owner’s access to India which is the third largest domestic aviation market in the world. It also highlights the potential of Sri Lanka as a hub for connecting India with South East Asia and Australia.
“A SriLankan Airlines hub could be established in Colombo airport to serve this purpose.
The development of this hub would be feasible based on the already existing critical mass of origin and destination traffic to and from Sri Lanka, which could cross-subsidise lower-yield connecting traffic.
The airline could be able to achieve larger economies of scale, which in turn would reduce its operating costs per passenger,” the teaser said.
“The air services agreement between Sri Lanka and India is highly liberal, allowing Sri Lankan designated carriers’ unrestricted frequencies to the majority of Indian cities, including metros, along with fifth freedom traffic rights connecting SAARC countries,” it said.
India is the largest source market for Sri Lankan tourism. Over two lakh Indians have visited the island nation till September accounting for 20 per cent of overall tourist arrivals, the Hindu Business Line claimed.