Govt. looking for credible investor to set up JV to run loss-making Mattala airport

Minister Nimal Siripala de Silva during the recent visit to MRIA 

• Daily loss of the airport estimated at Rs.10mn
• Losses currently financed by BIA income  
• MRIA also incurs large finance costs to service US$ 210mn loan borrowed from China to construct the airport

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

With daily losses at MRIA expanding to Rs.10 million per day amid multiple crisis which has led to a major slowdown in tourist arrivals, Minister of Ports, Shipping and Aviation, 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 eyeing a JV partner to manage it.

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

In 2020, the government that came into power suspended a JV proposal from the Airports Authority of India (AAI) to acquire the majority control and operations of MRIA under a 40-year concessional contract.
The losses incurred By MRIA are currently being financed with earnings from Bandaranaike International Airport (BIA). 

Further, he warned that the MRIA could face a financial collapse, if the employees and senior management fail to take tough decisions required to reduce operational losses.  

In addition to operational losses, MRIA also incurs large finance costs to service a US$ 210 million loan borrowed from China to construct the airport.

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

Although, several airlines began flights to MRIA in 2021 after the government waived off the embarkation levy for new airlines, De Silva revealed that no airline is currently operating scheduled flights to the airport.
However, he opined that the country requires a second international airport which meets international aviation standards for emergency landings. 

Hence, he shared that the restructuring of MRIA would be implemented to cut costs by operating with a limited number of employees while focusing on alternative income streams. Although, the government has invited airlines to use MRIA for their aircraft parking and aircraft maintenance, so far, no airline has come forward to take up the offers due to on-going economic, fuel and forex crisis in the country.

Even though no carrier is operating scheduled flights, MRIA has around 545 employees and a bus has also been allocated to transport a sizeable chunk of these employees to Mattala from Colombo on 
daily basis.  Hence, the Minister instructed MRIA officials 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 is still faced with the constant threat of elephant break-ins. Minister of Agriculture and Minister of Wildlife and Forest Resources Conservation, Mahinda Amaraweera plans to implement a new programme to avert elephant break-ins and attacks in the future.

Since its opening in 2013, MRIA is yet to break-even while losses have continued to swell.