Sri Lanka to renegotiate controversial deal with Emirates airlines

Colombo, Jan, 21 (AFP) — Sri Lanka Monday announced plans to review the controversial sale of its national carrier to Emirates airline of Dubai and said the new government was moving towards an open skies policy.

Aviation Minister Tilak Marapone said the March 1998 privatisation of the country’s national airline then known as Airlanka, had "probably created a monopolistic situation" that was detrimental to the expansion of the industry.

"The agreement (with Emirates) itself will have to be re-examined and see if they have been given a monopoly situation and then we will have to renegotiate the agreement," Marapone told reporters here.

Emirates bought 40 percent of Airlanka for 70 million dollars, but paid only 45 million dollars initially and won a concession to pay the balance of 25 million dollars in two and a half years.

However, Emirates was given total management control for 10 years together with concessions on fuel and the right to retain "national carrier status" which gave it privileges under bilateral air services agreements.

Prime Minister Ranil Wickremesinghe, who came to power following December elections, had warned his government would not honour commitments of the former administration on the sale of Airlanka.

Emirates went on to change the name of the local airline to SriLankan and has since shifted most of the airline’s administrative operations to its home base Dubai.

The ruling United National Party has also reported the Airlanka sale to the independent commission on bribery and corruption. The case is pending.

Wickremesinghe warned the World Bank in 1998 against insuring the Emirates investment in Airlanka against political risks.

"I am telling the World Bank: ‘Go with your eyes open,’" he said at the time. "We will renegotiate the deal when we come to power. We are making our position very clear so that no one can say that we didn’t warn them."

SriLankan airlines is currently losing heavily. Four of SriLankan’s jetliners were destroyed on July 24 when Tamil Tiger rebels mounted a daring attack on the island’s only international airport.

The new aviation minister said the government was keen to move towards an open skies policy to make Colombo the aviation hub of South Asia.

The new government was also reconsidering a ban on domestic flying, imposed since 1996, in a bid to boost the industry.

"We will have a set of legal and institutional reforms in place within 100 days to improve the aviation industry," Marapone said.

He said the country’s civil aviation department will be turned into an "authority" to give it administrative flexibility to hire experts to improve safety standards.

The administration of civil aviation matters through a government department did not allow it to hire technical experts at market rates, he said.