david fullbrook / singapore
Airlines flying into Sri Lanka's main airport have been hit by hefty insurance costs forcing them to review services
Airlines are rethinking their services to Sri Lanka's Bandaranaike International Airport due to soaring aircraft insurance premiums following the Liberation Tigers of Tamil Eelam attack on the airport late last month which resulted in the loss of half of SriLankan Airlines' fleet.
An industry source says that in some cases insurance companies are imposing surcharges of up to $100,000 a flight to Sri Lankan capital Colombo.
SriLankan expects to hear from its underwriters this week, but other airlines have already been hit with hefty premiums forcing them to up fares and withdraw many discounted tickets. "The biggest single threat and problem facing airlines is how underwriters assess operating into Colombo," says SriLankan chief executive Peter Hill.
The jump in insurance premiums was a contributory factor in Cathay Pacific's decision to suspend its Colombo services indefinitely on 24 July, just hours after the attack by the Tamil Tigers (Flight International, 31 July-6 August).
Thai Airways International is maintaining its services for now, but says it will monitor the situation closely. Other operators - including SriLankan's backer Emirates Airlines - are understood to be reviewing their Colombo services.
With only six operational aircraft left, SriLankan will not serve some destinations for the foreseeable future. "I'd expect about six to eight destinations to drop out of the winter schedule," says Hill. These include Berlin, Dhaka, Karachi, Stockholm and small airports in India only able to accept Airbus A320s.
SriLankan will not charter or lease aircraft to replace those damaged or destroyed for up to a year, although the situation will be reviewed in February, the peak of the tourist season. Hill wants to see how loads pan out before taking on more aircraft.
With fewer aircraft, SriLankan is awaiting the response to a second voluntary retirement programme in the hope of shedding around 300 staff. Some 700 employees left on 31 July after taking advantage of an earlier redundancy programme.
Source: Flight International
