Sri Lankan airline deal in the balance

Mumbai: The future of what could be one of the most lucrative aviation partnerships in South Asia was up in the air last night with Emirates and the Sri Lanka government locked in talks over a management contract for Sri Lankan Airlines.
Executives from Emirates, the biggest Arab carrier, which owns 43.5 per cent of Sri Lankan Airlines, met with officials of the Sri Lankan government, the controlling shareholder with 51 per cent, to seek a renewal of a 10-year contract to operate the national airline.
The talks follow controversy last month, when Colombo cancelled the work permit of Peter Hill, the Emirates-appointed chief executive of Sri Lankan Airlines, over a spat in which the airline denied seats to an entourage led by Sri Lankan President Mahinda Rajapakse.
A final decision on the partnership could come as early as today.
Sri Lanka's close economic relationship with India means the island's national flag carrier has rights to operate more services to its giant neighbour than any other foreign airline, with 100 flights a week to 11 destinations in India.
India-bound passengers - mostly from south-east Asia, the Middle East and Europe - account for an estimated 40 per cent of Sri Lankan Airlines' revenue.
Emirates' management contract for the airline, which began in 1998, expires on March 31.
03/01/08 Joe Leahy/Financial Times, UK

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Categories: Foreign Jan 2008