Govt. seeking credible investor to form joint venture to run loss-making Mattala Airport – Reuters

Minister Nimal Siripala de Silva during the recent visit to ARIM

  • Daily airport loss estimated at Rs.10mn
  • Losses currently funded by BIA revenue
  • MRIA is also incurring significant financial costs to repay a US$210 million loan borrowed from China to build the airport.

The government is actively seeking a credible partner to jointly manage the loss-making Mahinda Rajapaksa International Airport (MRIA) in Mattala to transform it into a profitable entity.

With daily losses at MRIA reaching Rs 10 million a day amid multiple crises that have led to a major slowdown in tourist arrivals, Ports, Merchant Marine and Aviation Minister Nimal Siripala de Silva , during a recent visit to MRIA, announced a plan to restructure the operations of the country’s second largest international airport while considering a JV partner to manage it.

“If a suitable investor comes along, we intend to enter into a JV agreement with the investor and transform MRIA into a profitable entity under the JV company,” he said.

In 2020, the incoming government suspended a joint venture proposal by the Airports Authority of India (AAI) to acquire majority control and operations of MRIA under a concession contract of 40 years.
The losses incurred by MRIA are currently being funded by revenues from Bandaranaike International Airport (BIA).

Additionally, he warned that MRIA could face financial collapse, if employees and senior management fail to make the tough decisions needed to reduce operational losses.

In addition to operating losses, MRIA is also incurring significant financial costs to service a US$210 million loan borrowed from China to build the airport.

The Minister has instructed Airport and Aviation Services (Sri Lanka) (Private) Limited to submit a restructuring plan for MRIA as well as a human resource management plan for the airport within one month.

Although several airlines started flights to MRIA in 2021 after the government waived the boarding fee for new airlines, De Silva revealed that no airline currently operates scheduled flights to the airport.
However, he felt the country needs a second international airport that meets international aviation standards for emergency landings.

Therefore, he shared that the restructuring of MRIA will be implemented to reduce costs by operating with a limited number of employees while focusing on alternative sources of income. Although the government has invited airlines to use MRIA for parking and maintenance of their planes, so far no airline has come forward to accept the offers due to the economic crisis, fuel and current changes in the country.

Although no carrier operates regular flights, MRIA has approximately 545 employees and a bus has also been assigned to transport a significant portion of these employees to Mattala from Colombo on
daily. Thus, the Minister has instructed the officials of the ARIM to take measures to set up accommodation facilities for 200 essential service employees within the airport premises.

Meanwhile, MRIA which is built on an elephant habitat still faces the constant threat of elephant break-ins. Mahinda Amaraweera, Minister of Agriculture and Minister of Wildlife and Forest Resources Conservation, plans to implement a new program to prevent burglaries and elephant attacks in the future.

Since its opening in 2013, the ARIM has still not reached equilibrium while the losses have continued to increase.