Srilankan Airlines low CostSri Lankan Airlines low costs
From Colombo to Emirates town of Sharjah. August 15, 2009, the biggest and most popular low-cost carrier in Southeast Asia, Colombo, the Sri Lankan capitol, will start low-cost services to Kuala Lumpur, the other side of the Bay of Bengal, the capitol of Malaysia. Connects Colombo to the Malaysia capitol Kuala Lumpur.
Connects Colombo to Chennai (Madras) on the Indian eastern shore. Low cost and low cost air travel between Colombo and Singapore. Provides low cost air travel from Colombo to Dubai. Upcoming low-cost intercontinental services from Colombo. Provides low cost flight from Colombo directly to Chennai. Provides low cost air services from Colombo to Fujaira in the UAE.
Connects Colombo to Trivandrum, Tiruchirapalli & Gaya. Discount flights from Colombo to Malé in the Maldives. Cheap and low cost flights from Colombo to Singapore. Low cost flight from Colombo to the Thai capitol Bangkok. Offers low cost air travel from Colombo to Dubai.
SriLankan Airlines & Mahin Lanka Prospects improve after strategy changes by new administration
The new Sri Lankan authorities are implementing changes in the strategy of SriLankan Airlines and its affiliate Mihin Lanka to improve their finances. In January 2015, the new administration, which was taken over, intends to combine the two state-owned airlines and has discontinued all services from the new Mattala IAM.
Both Sri Lanka and Mihin Lanka have been very inefficient in recent years, with some of the smallest margin levels in Asia. While the new administration is unwilling to preserve the current situation, it seems keen to make long-sought changes to make the soon-to merge carrier a profitable one.
Sri Lanka's standing has improved, spurred on by renewing the ship and becoming a member of one world. However, the airline's current policy was still on a course that would probably have necessitated long-term funding from the state. Mahinda Rajapaksa, Sri Lanka's long-time chairman, was vanquished by Maithripala Sirisena in a surprising vote from 8 January to 2015.
Rajapaksa had headed Sri Lanka for 10 years and was closely associated with the management of the country's aerospace industries. Mihin Lanka was founded in 2007 and was instrumental in regaining sovereignty over Sri Lanka in 2008, which had been administered by Emirates since 1998 and partly held by Emirates. Mr Rajapaksa has also taken the initiative to construct a second global base airfield in the Sri Lankan city of Mattala in his own county of Hambantota.
Sri Lanka and Mihin Lanka then had to start several missions in Mattala as part of a poorly thought-out twin hubs policy. In less than two week after the election, Sri Lanka promised the immediate cessation of service to Mattala. Sri Lanka had suspended some of its Beijing, Chennai, Jeddah, Male and Shanghai services in Mattala as part of delta connections between the new Colombo Bandaranaike International and Colombo airports.
Sri Lanka has also had Mattala stopovers on some of its previous flight to Bangkok, Riyadh and Tiruchirappalli. The Mihin Lanka ran similar triangulation lines with Mattala stations on some of its routes to or from Medan, Madurai, Gaya and Varanasi. Practically all the transport in Mattala was through. A number of passenger transfers took place between services, in particular from China to the Maldives and from Indonesia to Saudi Arabia.
However, this service is more readily serviced via Colombo, where Sri Lanka has the size, more connectivity and a much bigger residential population. Mattala' s own markets were virtually non-existent. Sri Lanka's three scheduled turnarounds between Colombo and Mattala on seven daily Airbus A320 aircraft in Sri Lanka had an airport utilisation rate of less than 20%.
The development of a second hubs is far from perfect as Sri Lanka is a relatively small airline with only 21 planes and about 4 million passenger movements per year. Sri Lanka has always depended strongly on passenger transits, which currently account for just over half of overall transport, but the volume does not warrant a two-hub approach.
Mattala' s present timetable, focusing on the Maldives-China and soon Indonesia-Saudi Arabia links, provides a better option than the initial timetable, which was too much based on a non-existent domestic one. However, by encouraging Mattala links such as the Maldives-China, Sri Lanka is reducing the number of links via Colombo.
China Maldives and Indonesia Saudi Arabia are good market places for Sri Lanka, but it might make more sense to concentrate on expanding quantities in Colombo. The opening of Mattala International Airfield in 2013 came with great enthusiasm as its completion was an important development for President Rajapaksa, who took over in 2006.
At the end of Apr-2014, the airfield was once again in the limelight when it housed participation in Sri Lanka's on-eworld event. However, the real thing is that Mattala Rajapaksa International is not needed and is a diversion in Sri Lanka's effort to change itself. Sri Lanka and Mihin Lanka are expected to see a significant cost cut after the recent closure of Mattala without any significant effect on revenue or transport.
However, both airlines were already very inefficient before the start of the 2013 flight to Mattala and have long been in need of a major recondition. Sri Lanka has suffered almost $1 billion in casualties since the takeover of power by the Sri Lankan authorities in 2008. The much smaller Mihin Lanka suffered a financial year 2014 financial deficit of around 10 million US dollars.
Sri Lanka has stated that it anticipates a net financial expense of approximately USD 100 million for the year ended 31 March 2015 (FY2015). Bringing to office an anti-corruption policy and a promise of reforms, the new Sri Lankan administration aims to turn Sri Lanka into a sustainable economic group. She quickly nominated a new president for the carrier and hired the executive board to try to turn Sri Lanka around and make it profitable.
At the end of January 2015, the Sri Lankan authorities also presented a plan to amalgamate Mihin Lanka with Sri Lanka. Currently, Mihin Lanka will continue to be administered independently until a final fusion, which the administration said would enhance efficiency and viability. Mihin Lanka does not have the size to be able to be a profit.
Founded when Sri Lanka was still under the Emirates' rule, Mihin Lanka was always an independent unit and not a low-cost carrier. Since then Mihin Lanka has been concentrating on recreational tours, even those that Sri Lanka has not yet been able to manage. Not one of the nine targets that Mihin Lanka currently operates from its Colombo hubs is also serviced from Sri Lanka.
Just one of these goals was among Mihin Lanka's first seven goals in 2007, when the airline pursued a very different networking policy and was competing with Sri Lanka on most itineraries. In 2014, Mihin Lanka further adapted its strategic direction by converting its Airbus fleet of Airbus A320s to a new Airbus VIP configuration.
Mihin Lanka's new products bring it closer to its SriLankan partners and offer a business-class choice for premier travellers flying from Sri Lanka. The Mihin Lanka already followed a hybrids and not a LCC -only aircraft offering check-in luggage, refreshments and beverages for all travellers. Whilst several Asiatic airlines are pursuing succesful two-brand policies, a stand-alone is probably a better policy for a small country like Sri Lanka.
Over the years, Mihin Lanka has developed and now operates a business that offers added value for its affiliate and the entire Sri Lankan economy. Clearly, the present state of affairs is a much better result than in previous years when the two Sri Lankan airlines had to compete against each other. Mihin Lanka hasn't been growing in recent years, which doesn't give him enough size to be lucrative.
Dual brands policies can be efficient, but Mihin Lanka-SriLankan is not a classic example of a dual brands policy, and yet Mihin Lanka is too small to be an efficient budgeting policy. While it continues to hybridize with the launch of introducing the Black Card, Mihin Lanka is trying to strengthen his market share. However, in the end, the prospects for both Mihin Lanka and Sri Lanka would be better if the two airlines were to merge.
The merger of Mihin Lanka with Sri Lanka will also open up further goals for Sri Lankan counterparts and the on-eworld-Allianz. Sri Lanka joined one of the world' s largest partner organizations in May-2014, but Mihin Lanka did not join the two. Consequently, the Mihin Lanka Affiliate Program, which comprises multiple goals that are not serviced by members of Mihin Lanka or only serviced by one member of Mihin Lanka, is not part of the Allianz.
Mihin Lanka's fusion will immediately increase the total destination base in Sri Lanka from 31 to 40 (including Colombo). Efficiency will also increase when activities are pooled, leading to much-needed cost-cutting. However, the recently merged carrier must quickly gain an overview of Mihin Lanka's naval base. Mihin Lanka and SriLankan both currently fly Airbus A320s, while Mihin Lanka 2014 took the step of moving to 737s, a step that never made sense given his relation with Sri Lanka and the fact that SriLan's MRO department only has Airbus A320 capacity.
It is possible that Air Lease could instead deliver A320 planes to Mihin Lanka/SriLankan. Sri Lanka has also negotiated possible leasing contracts for A320neo familiy jets as part of the next stage of its refurbishment program. Sri Lanka's wide-body fleets were renewed in the fourth quarter of 2014 with the shipment of the first two A330-300s. Sri Lanka pledged to purchase six A330-300s and seven A350-900s in 2013.
Sri Lankan has no plans to expand its long-haul operations as the six A330-300s have been purchased to replace its six A340-300s (although Sri Lankan does not yet have one of its A340s in net development), while its five A350-900s have been purchased to replace its five A330-200s. It should not be necessary for the new Sri Lankan authorities to fundamentally adapt the naval scheme or the naval obligations of Sri Lanka, as they are not too overambitious.
Whilst the Mihin Lanka fusion and the discontinuation of Mattala' s operations are sensible policy changes, other elements of the former Sri Lanka' s policy should continue to include renewing the Sri Lankan fishing fleets. Accession to ineworld is also an important part of the existing policy, which should begin to pay off in the coming years.
Sri Lanka has been following partnership with members of one world since joining the Allianz nine month ago. Sri Lanka should further expand its partner base - both within and outside one world - and expand some of the connections it has built up over the past few month. Sri Lanka only shared codes with two members of one world when it joined the Allianz on May 1, 2014 - Malaysia Airlines (MAS) and Royal Jordanian.
Since then, it has introduced codeshare with Asiana, Finnair, S7 Airlines, Qantas and Japan Airlines. BA, Cathay and Qatar together with MAS are the only one-world airlines to serve Colombo. According to CAPA and OAG figures, one-world currently holds around 59% of Colombo's seating area. Included in this is a 49% stake from Sri Lanka.
As a result of the proposed fusion with Mihin Lanka, Sri Lanka's stake would rise to around 55% and oneworld's to around 65%. Partnering could become even more important for Sri Lanka as the carrier is likely to reorganise its global communications as part of its new turn-around effort. Sri Lanka has already resolved to discontinue flights to Moscow with effect from 8 February 2015 since the fall of the Berlin Wall.
Sri Lanka should concentrate primarily on the main sources of its tourist industry, as those highly dependent on transits are likely to generate lower revenues. Rajapaksa had great aspirations to become a Sri Lankan president, but these are not real in the new profit-oriented world. It is expected that China will remain the focal point of economic expansion as it is by far the most rapidly expanding tourist destination in Sri Lanka.
The number of visitors arriving from China more than tripled to 128,000 in 2014 as overall numbers rose by 20% to 1.5 million, according to Sri Lanka Tourism Development Authority datas. In December 2014, SriLankan began flights to Kunming, its forth Chinese gateway to Beijing, Guangzhou and Shanghai. While SriLankan continues to serve Guangzhou and Hong Kong via Bangkok, it is considering converting Hong Kong and Guangzhou to non-stop, as it did with Beijing and Shanghai in early 2014.
However, Hong Kong could be a more sustainable one if Sri Lanka is able to enter into a Cathay Pacific relationship. Sillankan has also operated charter services to other minor China towns such as Chengdu and Chongqing. However, the growing competitive pressure from China's airlines and the absence of a China based business associate are challenging factors.
After China Eastern, Air China became the second airline in China to fly to Columbo on February 10, 2015, when it started four daily departures a week from Chengdu. The non-stop production on the Sri Lankan-Chinese domestic and international markets grew ninefold last year, from around 500 to around 4,500 one-way places per week. Sri Lanka, which started non-stop services to China at the end of March 2014, accounted for around 2,800 of these passengers.
Sri Lanka still serves four European countries - Frankfurt, London, Paris and Rome - but faces strong golf carrier pressure in the Sri Lanka-Europe area. Sri Lanka's biggest primary energy supply is still in Europe, but relative moderate expansion. Both Emirates and Qatar Airways are the two biggest overseas airlines in Sri Lanka and are currently the only overseas airlines with more than two flights a day to Colombo.
Etihad offers two flights a day from Abu Dhabi to Columbo, while Etihad offers two flights a day from Abu Dhabi to Cuba. Emerirates also runs a day flight from Columbo to Singapore, which Sri Lanka runs with 19 flights a week and is the airline's number four airline in terms of seating capacity.
Columbo-Male is Sri Lanka's biggest itinerary with up to 10 connections per day. Maldives is an important target for transits, but could experience a decline as Sri Lanka concentrates more on incoming transport. Sri Lanka will have to rethink its long-haul networks, as well as its aspirations for Australia. In October 2015, the code share with Qantas to Brisbane, Melbourne and Sydney via Singapore should be adequate for the Aussie markets.
Sri Lanka may also work with Qantas' Jetstar Asia in Singapore to provide off-line connectivity to targets across Southeast Asia. Sri Lanka could also benefit from a partnership in India, its biggest individual destination with seven countries representing 24% of its total seating area. Sri Lanka has a particularly large footprint in near South India, but as in the Maldives, this transaction depends strongly on relatively low-income transits with low premiums driven demands.
Onworld affiliation should help increase revenues and draw more prime travellers as other Onworld airlines begin to use Colombo for access to Southeast Asia. Sri Lanka is the only member of one world. However, as Sri Lanka becomes more profit-oriented, some local targets and frequency bands need to be reduced as they are unlikely to make a beneficial impact.
Sri Lanka has a difficult path ahead of it when it comes to achieving viability. However, the forthcoming Mihin Lanka fusion and Mattala withdrawal are moves in the right directions, as are the existing portfolio regeneration and partnerships policies. Concentration, a more effective fleets, new code shares and the recent drop in the price of crude should lead to a significant decrease in loss from 2016 onwards.
Further changes, also in the route structure, are required to enable the turnaround.