Tuesday, August 15, 2017

India To Sri Lanka: Forget China, We Want Your Empty Airport

An Indian company has emerged with a bold plan for taking over Sri Lanka's struggling Mattala Rajapaksa International Airport (MRIA). The proposal, which would see India pumping $205 million into the airport for a 70% share for 40 years, was approved by Sri Lanka's Civil Aviation Minister Nimal Siripala de Silva and sent on to the country's cabinet for review. While Sri Lanka has received a total of eight proposals from various other parties -- including China -- to take over the airport, the Indian plan is reportedly being reviewed separately.

For many years, there was a very strong demand for Sri Lanka to add additional international aviation capacity. Air traffic through Colombo was getting too heavy, and the country either had to add an additional runway there or build or expand another airport elsewhere. At a cost of $209 million —  most of which coming from China — Sri Lanka chose the later option, building Mattala International far out in southern Hambantota district, a 250 kilometer drive from Colombo.

This airport started out as a key part of an ambitious plan by Sri Lanka’s former president Mahinda Rajapaksa to transform his extremely rural hometown region into Sri Lanka’s number two metropolis. In addition to the airport, there would be a $1.4 billion deep sea port, a large industrial and export processing zone, an exhibition center, a large cricket stadium, and a hotel and leisure area that would be connected together by some of the country’s best highways. The idea was that all of these large projects would rise up together and support each other. It was an all or nothing wager placed on creating an entirely new economy out in the middle of the jungle.

However, this great scheme has yet to come to fruition. Being located in a remote area in an under-developed part of the country, Mattala airport has struggled to attract both passengers and airlines. Only one or two flights per day This squalid state of affairs has led to the airport suffering major financial losses, with the government claiming that MRIA had hemorrhaged $112.9 million by the end of last year. It has become abundantly clear that Mattala International cannot provide the financial sustenance necessary for Sri Lanka to pay back the $190 million of loans that the Exim Bank of China provided to build it anytime soon.

currently stop there, and, according to the Sri Lankan government, the 3,000 flights that touched down at the airport in 2014 served just 21,000 passengers -- averaging a mere seven passengers per plane. This has led to MRIA being dubbed the "world's emptiest international airport," with its vacant corridors, gates, and tarmac serving as more of an attraction for curious journalists than actual passengers.
14/08/17 Wade Shepard/Forbes