ECONOMYNEXT – A shortage of jet fuel in the country due to forex shortages is costing the state-run SriLankan Airlines an extra 7 million US dollars a month, though the airline is operating most of its schedule, an official said.
“Now we are running 90 percent of our flights even though there is no fuel in the country which is costing us about 7 million US dollars per month in extra and lost revenue,” Richard Nuttall, the Chief Commercial Officer of SriLanka Airlines told Economy Next at the sidelines of a media brief.
“To carry the extra fuel, we can’t carry all the freight we like to into the country.”
SriLankan Airlines was stopping at third countries like India to load up on fuel for long haul destinations.
Carrying fuel for the return journey, a tactic known as tinkering, forces an airline to cut down freight
The hit from fuel came after the airline SriLankan reported a profit of 1.7 million US dollars in the March 2022 quarter for the first time since 2006, after cutting costs such as staff costs and overheads; renegotiating supplier contracts and increasing cargo revenue.
Nuttall said few months ago they were not sure of even operating 30-40 percent of the flights due to lack of sufficient jet fuel in the country.
The state-run Ceylon Petroleum Corporation could not import enough jet fuel due to forex shortages coming from a broken soft-peg. Sri Lanka is currently undergoing the worst currency crises in the history of the island’s intermediate regime central bank.
The Ministry of Energy has said it had appointed a third party to import jet fuel.
“Its not sustainable but we have maintained operations,” Nuttall said. “We understand we will be getting jet fuel very soon.”
The currency collapse had reduced the spending power of holiday makers in Sri Lanka while tourists were also put off by fuel shortages and popular protests.
“While the tourist numbers are not that great there’s demand from Sri Lanka diaspora, Indians,” Nuttall said.
He says being a small airline has allowed them to be nimble and shift capacity.
“If we are getting more demand from one destination, we will put more flights there.”