Airport and Aviation sector to recover with Treasury bailout
Airport and Aviation Services and national carrier operations are set to recover by the end of this year with government’s stimulus package and ease of air travel restrictions even amidst current revenue losses, the Finance Ministry says.
The airport and aviation sector has suffered a massive financial loss recently owing to a drop in traffic and the waiver of landing and parking fees which was extended till July 2021 recently. These charges had been waived at the Mattala Airport since March last year, while the Bandaranaike International Airport (BIA) had enforced it since last September, dealing a severe blow to the coffers of the national carrier, a senior official of the airline said.
According to provisional estimates of the Treasury, Airport and Ground handling, the most profitable strategic business unit of SriLankan Airlines, has reported net revenue loss of Rs. 9.57 billion (US$ 56.7 million) during the period from September to December 2020.
The airline recorded $ 27.1 million total traffic revenue while incurring a loss of $ 48.7 million (around Rs. 9 billion) only during April and May 2020 and is expected to lose $185.3 million (Rs. 34.4 billion ) in the financial year to 2020 /21 due to the adverse impact of COVID-19 on the aviation industry, ministry records revealed.
To recommence international schedule flight services at Mattala and commence regional schedule flight services at the BIA, a package of promotional activities including a waiver of embarkation levy percentage and land and parking charges was introduced.
The prevailing shutdown had a significant adverse impact on passenger traffic at BIA during the first and second quarters in 2020 due to reduced flight numbers caused by the suspension of air services by regulatory authorities in Sri Lanka and around the world. According to Treasury records, preliminary profit before tax of the Airports Authority up to April 30, 2020 is Rs.1.41 billion which is a 76 per cent reduction compared with a profit of Rs. 5.94 billion recorded in the same period of 2019.
The ministry has extended fiscal stimulus package to Sri Lankan Airlines for its recovery to 75-80 per cent pre-pandemic revenue levels by the end of this year with the reopening of international airports for travellers. Government has pledged $500 million in financial aid, of which $150 million was disbursed recently, a senior Treasury official said, adding that the rest of the funds will be disbursed over two years.