Forward plans to transform Sri Lanka into a global aviation and logistics hub

Harischandra Gunaratna of The Island Financial Review speaks to Andre Fernando, Managing Director of MAC Holdings (PRIVATE) LTD

Sri Lanka’s strategic location in the Indian Ocean among major air routes connecting Asia, Europe, Africa and the Middle East, offers a unique opportunity to transform the island into a thriving aviation hub. With the right investments and policy changes, Sri Lanka can leverage its geographical advantage to bolster tourism, facilitate international cargo & passenger transportation, and serve as a key transit point for passengers and goods. This vision not only promises to boost the nation’s economy but also has the potential to redefine its position on the global aviation map. Perfect example is the growth of 4 prominent airlines; Emirates, Fly Dubai, Air Arabia and Etihad and their importance to the economy of UAE, which was a desert in the mid-1990s.

Why Sri Lanka is well-suited to be an aviation hub

Strategic Location: Sri Lanka’s proximity to major global markets—India, China, Southeast Asia, Africa the Middle East and Europe—makes it a perfect transit point for airlines and cargo carriers. This natural geographic advantage means shorter flight routes and lower fuel costs for airlines choosing to hub in Sri Lanka. Sri Lanka could also be the best hub to connect passengers and cargo to Africa and minimize the long deviation one has to take by travelling via Middle- East hubs of Dubai, Abu Dhabi, Doha or Bahrain.

Tourism Potential: The country has long been a magnet for tourists due to its rich culture, pristine beaches, wildlife, and heritage sites. A strong aviation sector will help open new tourism markets, providing better connectivity to key destinations.

Cargo Hub Opportunity: Sri Lanka is positioned at the crossroads of key maritime and air trade routes, making it an ideal center for logistics and cargo services. With growing demand for air freight in e-commerce and perishable goods, Sri Lanka could serve as a bridge for goods moving between East and West. PPP investment at BIA must be done to invest in a courier and e-commerce hub terminal which is a dire necessity.

What are the steps to establish Sri Lanka as an aviation and cargo hub?

1. Upgrade Infrastructure

Expand Airport Facilities: The Bandaranaike International Airport (BIA) in Colombo is Sri Lanka’s primary international gateway, but it faces capacity constraints. Expanding BIA’s terminals and runways to accommodate more flights and passengers is essential. Mattala Rajapaksa International Airport, located in the South, can also be developed as a complementary MRO facility and also a secondary airport for leisure charter flights to be moved to tourism hot spots like Passe kudah, Yala and Arugam bay.

Enhance Ground Handling and Technology: To attract airlines and cargo carriers, Sri Lankan airports need world-class ground handling services, including efficient passenger & cargo handling, including that of passenger baggage, faster immigration & customs clearance and seamless technology integration for booking and scheduling. In order to be competitive one could also moot a 2nd ground handling service which can be a PPP and compete with Sri Lankan airlines.

2. Attract More Airlines and Routes

Open Skies Policy: Adopting more liberal air service agreements with key markets could encourage international airlines to increase their services to Sri Lanka. An open skies policy, or at least partial liberalization, could make Sri Lanka more accessible to global carriers and stimulate both passenger and cargo traffic.

Partnerships and Code Shares: Encouraging SriLankan Airlines to forge stronger code-sharing partnerships with major international carriers would facilitate seamless connectivity, making the island a more attractive stopover for passengers.

3. Develop Cargo and Logistics Capabilities

Establish Free Trade Zones (FTZs): Strategically located Free Trade Zones (FTZs) near the airport, with efficient customs and logistical services, would help attract multinational logistics firms to use Sri Lanka as a warehousing and distribution hub.

Cold Storage and Perishables Handling: Investing in cold storage facilities at airports would allow the nation to become a key player in handling perishable goods, such as food and pharmaceuticals, which require specific conditions during transport.

Leverage Port-Aviation Synergy: The close proximity of Colombo’s port to the airport offers unique opportunities for an integrated sea-air logistics system. Creating multimodal logistics corridors between the Port of Colombo and BIA would enable seamless movement of goods, particularly for time-sensitive shipments.

4. Boost Human Capital and Expertise

Training and Development: Investing in training programs for aviation personnel, including pilots, ground crew, air traffic controllers, and cargo handlers, will ensure a skilled workforce capable of meeting global standards. Minimizing the loss arising from our experienced and trained staff migrating to Middle East countries is a must. This will naturally stop if we can make Sri Lanka a key aviation hub as our salaries will improve to match regional markets in the Middle East and Asia.

Aviation Management Schools: Developing educational institutions focused on aviation management, engineering, and logistics will cultivate local talent, reducing dependence on foreign expertise while fostering innovation within the sector.

5. Enhance Tourism Infrastructure

Create More Tourist Attractions: Developing world-class infrastructure, including hotels, theme parks, and luxury resorts around key airports, will make Sri Lanka more appealing as a tourism destination.

Improve Connectivity: Strengthening the domestic aviation network will allow international tourists to easily explore all corners of the island. Investments in regional airports, like those in Jaffna, Hambantota, and Trincomalee, can play a critical role in this.

6. Sustainability and Eco-Friendly Practices

Green Airports: Building eco-friendly airport infrastructure and encouraging the use of renewable energy can enhance Sri Lanka’s image as a sustainable tourism destination.

Carbon Offsetting Programs: Implementing carbon offsetting schemes for airlines operating in Sri Lanka will help mitigate the environmental impact of increased air traffic and appeal to environmentally conscious travelers.

What are the benefits of a Sri Lankan aviation hub?

Economic Growth: A well-functioning aviation hub will drive investment, create jobs, and increase the island’s GDP. From tourism to freight forwarding, the aviation sector can have a multiplier effect across industries.

Boost to Tourism: As Sri Lanka becomes a transit point, it will increase exposure to new tourists who can be enticed to stay and explore the country. Targeting niche tourism, such as medical tourism, eco-tourism and adventure travel, will diversify the industry.

Enhanced Trade and Connectivity: The establishment of a logistics hub will facilitate regional and global trade. Sri Lanka will become the go-to center for re-exports and regional distribution, attracting multinational companies to use its airspace and logistics capabilities.

What are the challenges to overcome?

While the potential for an aviation hub is promising, Sri Lanka must overcome several challenges to achieve this goal:

Political Stability: For long-term investments in aviation infrastructure, political stability and consistent policies are necessary.

Regulatory Framework: A transparent and investor-friendly regulatory environment will be essential to attracting foreign airlines and logistic operators.

Financial Investment: Developing airports, logistics centers, and tourism infrastructure will require significant financial resources and strategic public-private partnerships.

(Andre Fernando is a self- made entrepreneur and the grandson of a billionaire businessman from Wattala,Boniface Fernando hailing from an era when billionaires were far and few in the country. Fernando is the chairman of the Transport and Logistics committee of the National Chamber of Commerce of Sri Lanka)