The imminent end of the war after a near three decades has given rise to fundamental policy changes in the Sri Lanka aviation policy with the government discussing a major policy change with international passenger and cargo services being opened to the private sector..

Currently this is restricted to Sri Lankan Airlines and Mihin, both state owned services. Initially the Civil Aviation authority may be called upon to open the market further , depending on demand. Opening up toa third and fourth carrier would depend on large growth and the recovery of the global economy, LBO reported.

A new Sri Lankan aviation policy aims to encourage investment and open the sector up for more carriers, ground handling and caterers as the economy recovers from war and the market grows, officials said.

A draft policy now being discussed by government and industry suggests allowing private local airlines to operate international passenger and cargo services under existing or future air services arrangements.

Scheduled international passenger air services are now restricted to the national carrier, Sri Lankan Airlines, and budget carrier Mihin Lanka, both state-owned.

Private airlines are allowed to do international non-scheduled charter passenger services and one domestic airline, Expo Aviation, operates international cargo flights.

Civil Aviation Authority officials said the draft aviation policy has suggested opening up the market further, depending on demand.

"Now international passenger operations are limited to Sri Lankan Airlines and Mihin," said an official,

"Whether a third player will be allowed to operate international passenger services will be decided based on the size of the market, with the country coming back to normal after the war and with increased air travel when the economic downturn ends."

Airlines are expected to suffer huge losses this year because of the slump in passenger and freight transport caused by the global economic crisis but the beginnings of a recovery are expected next year.

"If there’s a big growth, with the recovery of the global economy and an end to the war, the government might open up even for a third and fourth carrier," said an official.

Government forces have almost crushed the Tamil Tiger separatist rebellion after a near three-year military campaign.

The draft aviation policy also suggests encouraging multiple ground handling agents and catering companies at Sri Lanka’s airports.

Presently, ground handling and catering at the sole international airport at Katunayake, north of Colombo, is done by the national carrier, Sri Lankan Airlines.

The national carrier has long had a monopoly on the two businesses, profits from which helped offset losses from airline operations.

But other airport users have complained costs were too high and had lobbied for the businesses to be opened up for competition.

Civil Aviation Authority officials said the new policy might open up ground handling and catering opportunities at other airports in the island, both existing domestic ones as well as a planned new international one in the south.