Sri Lanka-India air liberalisation not fully exploited by domestic carriers
ECONOMYNEXT – Sri Lanka has not been able to fully capitalise on the near-monopoly position it holds on the Sri Lanka-India air routes, a recently released World Bank report said.
Positive impacts of air service liberalisation between Sri Lanka-India could have been much higher if it wasn’t for structural weaknesses of domestic carriers, the report said.
Capacity constraints from the lack of aircrafts and poor service quality have been the main contributors.
SriLankan Airlines’ small fleet of 25, faces competing demand from East and South East Asia routes and is unable to operate on profitable Indian routes, said the report.
Sri Lankan carriers,SriLankan Airlines and Mihin Air, accounted for 80 percent of supply capacity on these routes because Indian carriers scaled back operations.
The report, ‘A Glass Half Full: The Promise of Regional Trade in South Asia’, said that Sri Lankan carriers only face limited competition, mainly on three out of the 10 routes between Sri Lanka-India.
The lack of competition has also partially pushed up airfare on these routes. (COLOMBO, October 17, 2018)