Business Times

Deadline issues, gaps in agreement raised at pre-bid Mattala airport meeting

By Sunimalee Dias

MATTALA - Investors are likely to face a rude shock on submitting proposals to the Hambantota International Airport (HIA) after it was discovered that international airlines are yet to have firm discussions with the state on flying to Mattala.

During the pre-bid meeting of investors conducted by Airport and Aviation Services of Sri Lanka Ltd. (AASL) held at the airport site on Wednesday, investors were presented with the plans and targets set for the construction of the new Southern airport.

Responding to questions posed by investors of any agreement with airlines to fly to Mattala, AASL Vice Chairman Kamal Ratwatte who chaired the meeting said that at least three international airlines namely Emirates Airlines, budget carrier Fly Dubai and Qatar Airways had agreed to fly to Mattala.
He said that while Emirates Airlines and Fly Dubai have agreed to fly seven frequencies, Qatar Airways has agreed to operate three frequencies to Mattala.

But Emirates Airlines in a statement issued to the Business Times, said "There has been no formal discussion with Emirates on these matters." Interestingly, investors speaking with the Business Times on the day of the meeting said they had been convinced that airlines were flying into Mattala and of the prospects of the second airport based on this response given by AASL authorities.

Qatar Airways Country Manager Clifford Christopher told the Business Times that they were still awaiting documents from authorities regarding facilities at HIA, the market situation and details relevant to airline operations.

Once this information is forwarded to the airline's head office in Doha a decision would be arrived at on flying into Mattala, he said. However, he pointed out that if the government wants airlines to operate to this destination then they would have to follow. Currently, Qatar Airways operates three frequencies to Bandaranaike International Airport (BIA) per week. Mr. Ratwatte also stated that all charters would be diverted to HIA although these are seasonal flights. He pointed out that they were currently negotiating with three more airlines as well.

Meanwhile, government plans to invite proposals for the HIA ran into further problems when investors called for an extension of the March 15 deadline and highlighted technical gaps in the agreement. Investors raised the issue of reasons for having a deadline for submission of proposals pointing out that it was not a one-off exercise. In response, the authorities pointed out that although it was not a one-off exercise any remaining lands would be made available at the next round of Request for Proposals (RFPs). Saurabh Shah, Head of Commercial at Rahi, queried why there was no provision in the agreement for any delays on the part of the government in achieving the set targets of delivering on time. Indian-based Rahi is an organization with operations in regional airports and provides MRO, air taxi and other ancillary services.

However, they noted that there needs to be an increased public private partnership in Sri Lanka to encourage investment. Investors pointed out that the RFP provided by the authorities does not have any legal matters covered and had no terms and conditions mentioned and in this respect requested for guarantees from the government.

In this regard, authorities agreed to take up these issues and make the necessary provisions. Mr. Shah observed that HIA is in a strategic location and with the infrastructure opening up it was an ideal opportunity to explore. But on the other hand he pointed out that there were checks and balances that needed to be worked out as well. Expo Aviation said they wanted the fundamentals to be in place and noted that they were convinced that airlines would fly to Mattala.

The company is interested in engaging in Maintenance Repair and Overhaul (MRO) business at the airport and pointed out that there was a "lot of untapped potential." Diego Holdings Director - Technical Dammika Abeywickrama told the Business Times that they were interested in establishing a manufacturing plant at the airport amounting to approximately US$1.5 million as there were investment benefits and other free trade opportunities at Mattala. AirDora Director Prassanne Ranaweera said they were interested in initially operating charter flights to Hambantota. As a handling agent, the company believes that since HIA would have an open ended policy it would be ideal opportunity to establish its operations.

He noted that they faced difficulties in establishing their operations at the BIA due to the monopoly exercised by SriLankan Airlines. Certain investors believed that authorities should have provided them with the necessary information and details of even the meeting. In this regard, they noted that authorities need to provide adequate information prior to conducting such meetings.

Stage I of the HIA project at Mattala is being carried out at a cost of US$209 million. The airport is scheduled to open in November.

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