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August 2005

Sri Lanka pushes sea-air hub concept for Colombo

The Civil Aviation Authority of Sri Lanka has launched an initiative to create a sea-air cargo hub in Colombo to boost the air cargo industry, the Port of Colombo, and in broader terms the national development of Sri Lanka. Payload Asia reports.

The chairman of Civil Aviation Authority, Air Vice Marshal (retd) P. H. (Paddy) Mendis says: “The development of cargo will help boost the manufacturing and retail industry in our country, but we also want to ensure that Bandarinaike International Airport (BIA) is fully utilised.”

Mendis says that, apart from passengers, the airport must focus on other related industries as well, such as cargo, "because there is great potential in this sector.”


AVM (retd) Paddy Mendis		H. M. C. Nimalsiri

Before the sea-air hub concept can be realised, however, Mendis feels that the cargo infrastructure of BIA must be brought to the more or less liberalised levels of other international airports such as Singapore and Dubai.

That process is facing a couple of obstacles, he says.

One of the main impediments is a clause in the agreement between Sri Lankan Airlines and Dubai-based Emirates (which owns 49 percent of the Sri Lankan carrier), which states that no other company than Sri Lankan Airlines can handle foreign carriers at BIA. In other words, a monopoly, which, according to Mendis, is keeping other airlines away from Colombo. The monopoly does not include domestic carriers, which have been allowed to carry out their own cargo handling.

The sole operator clause, which will expire in 2008, limits the choice for new carriers to contract their ground handling activities to the national carrier, he says. Although Mendis is in favour of a more liberalised model, he realises at the same time that the rights and position of the national carrier also have to be taken into account.

“We are very concerned with the fortunes of Sri Lankan Airlines, but the concerns of Sri Lankan Airlines do not supersede the concerns and the national interests of the country,” he says. “Obviously, we will not do anything that is detrimental to the airline, but at the same time we will not allow the airline to hold the country to ransom.

"At the end of the monopoly in 2008 it will be mainly up to the national carrier if we will allow competition. If they are so competitive that nobody else wants to come in, then that’s fine with us. All we want is a competitive service, so that other carriers will find it attractive to come here.”

Ironically, the exclusive operator status of Sri Lankan Airlines at the airport has more or less been circumvented by 23 members of the Sri Lankan Freight Forwarders Association (SLFFA), which five years ago established SLFFA Cargo Services Ltd and managed to acquire an on-airport facility.

In the ensuing years this terminal has developed into a successful alternative import cargo point to the Sri Lankan Airlines facilities. Unloading of incoming cargo and transportation to SLFFA facility is, however, still in the hands of the national carrier.

May be not right away, but Mendis is adamant that the Civil Aviation Authority will ultimately issue licences to other parties that want to self handle or provide ground handling activities at BIA.

In addition to Sri Lankan Airlines and SLFFA Cargo Services, he feels that there would be room for a third ground handler. “We have had discussions with Sri Lankan Airlines to try and reduce the costs and make them more compatible with the charges at other airports in this part of the world,” he says.

“We can’t expect a carrier such as, for instance, Korean Air to come to Sri Lanka, pay normal landing and parking fees and then on top of that, pay a surcharge of US$2,000 or US$3,000 more for handling.”

Mendis stresses that Sri Lankan Airlines offers a good ground handling product, but he says that BIA has to be competitive and attractive to lure more carriers and develop it into a true air cargo hub, or even better a genuine sea-air cargo hub for South Asia.

Mendis is acutely aware of the fact that certain international airports in southern India, such as Cochin and Bangalore, are fast developing to reach the hub status and fill the void in the Indian sub-continent that Sri Lanka has been mapping out for itself. He says that if BIA and the port of Colombo were, one way or another, directly connected, the combination could be turned into a genuine sea-air cargo hub.

To that end, proposals have been submitted to establish a new cargo handling company in which the SLFFA Cargo Services would hold a 60 percent stake, 20 percent would be owned by the airport and aviation services and 20 percent by the Sri Lankan Port Authority. The proposals are currently with the Minister of Aviation and once approved, the new company, which will mainly handle exports and transhipment cargo, will build terminals at the airport and near the seaport, which will also include the necessary Customs facilities.

Mendis says that he hopes that the formation of the company and the construction of the US$5 million infrastructure can start before the end of the year.

“Time is a very important factor. The sooner we can start, the better we will be able to meet competition in the region. The geographical advantage that we had 20 years ago, doesn’t exist any more,” Mendis states.

Connecting BIA and the port obviously forms a vital element in the sea-air hub plans and while using the existing road infrastructure (which is heavily congested), or building a new highway between the two points are available options, Mendis says that a rail link is also under consideration.

The rail link is already partly in place at the airport and would need extension to the port, says director general of Civil Aviation and chief executive officer, H. M. C. Nimalsiri. He refers to an existing, single rail link at the airport that ends at the airport’s cargo facilities and which could be extended to the port. That would give cargo an uninterrupted and quick connection between the two points, he says.

Although Nimalsiri understands the urgency of the sea-air project that Mendis is pushing, he feels that there are a number of aspects that require careful evaluation, including environmental, social and financial considerations.

“It’s not just the sea-air hub concept that needs to be evaluated, it also involves the construction of a second runway at BIA, because in 2008 we need to re-surface the existing runway, which has been in operation for 18 years. We are talking about huge investments,” he points out.

Nevertheless, Nimalsiri fully supports the sea-air hub concept. He agrees with analysts that a trouble-free ground connection between the port and seaport is vital for a seamless transhipment function. Countries that have experimented in the past with the sea-air concept, such as Singapore, Dubai and more recently Korea, all agree that an efficient surface link between port and airport is vital.

"A rail link, certainly if the infrastructure is already partly in place, is as good as a road link. Obviously, provisions must be made to allow carriage of sea and air containers by rail," says one specialist, who has been involved in sea-air cargo.

For Nimalsiri the link can be rail or road, "but it has to come very fast, otherwise our attempts to promote Colombo as a sea-air hub, will not work."

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Copyright for texts and pictures: Payload Asia, Singapore. This report is brought to you in partnership with Payload Asia, the air cargo/express magazine for the Asia-Pacific and Middle East regions. To learn more about Payload Asia, please visit their website.