Feb 24, 2017

SriLankan Airlines slows down operations in low yield routes

The debt ridden SriLankan Airlines slows down its plans aircraft operating in low yield routes as the national carrier suffered a severe setback in A330 aircraft deal with Pakistan International Airline (PIA).

PIA has gone against the agreement to acquire three A330 aircraft from the national carrier in June last year halting the operation of the airbus taken over by them for its London Lahore-Islamabad route of premier service last month.

PIA will not acquire the remaining 2 A 330’s under the deal from SriLankan Airlines even though the crew was trained by Sri Lankan Airline’s officers, Pakistan aviation official said.

PIA suspended its lease with SriLankan on February 9 with a massive sum of money still outstanding. It will no longer lease two additional A330-300 aircraft from SriLankan as earlier planned, authoritative sources confirmed.

The airline announced in a statement that Pakistan’s national aviation policy did not allow it to wet-lease an aircraft for more than six months. It said it has now short listed another plane to replace its “PIA Premier” product that was operated on the SriLankan A330-300 between Pakistan and London.

Currently PIA is engaged in repainting the aircraft in Karachi which will be returned soon the official said.

PIA’s decision to return the aircraft already leased out by them while canceling the acquisition of the other two aircraft, will push SriLankan Airlines to ground all the three aircraft incurring heavy losses, an aviation expert said.

The A330 aircraft which was flying to Paris, Rome and Frankfurt under SriLankan Airlines banner had to be diverted to PIA and the national carrier had to give up this route at heavy expense of millions of dollars, he claimed.

The national carrier has pulled out of the Frankfurt and Paris routes while dropping Rome last year.

This action has been taken because the European routes have “low yields” and the airline now concentrates its resources on increasing regional flights; that are shorter, have more passengers and higher profit margins, officials said.

Currently operational losses of SriLankan is $ 993 million but with liabilities it increases to $ 2.1billion, making it a hard sell. Treasury has released $ 88 million for debt payments last year.

But the Treasury has refused to release for debt payments of the airline as the state coffers are also cash strapped, they said.