It was sometime in the middle of 2022, and SriLankan Airlines saw signs of a travel market emerging from the depths of the coronavirus pandemic.
As airline chief Richard Nuttall puts it: “We were coming out of Covid, and things were on the up and up. We were expected to have a good year.” Then, the economy collapsed, leaving the debt-laden country unable to pay for imports including fuel and – more crucially – jet fuel. Nuttall says the airline had to alter operations. Staff worked longer shifts because there was no fuel to get them to and from the airport.
Several months later, things are looking up for the Colombo-headquartered carrier. Nuttall says the airline hopes to return to its 27-aircraft fleet by the middle of 2024, as it had cut aircraft during the pandemic amid the decline in travel demand. According to Cirium fleet data, the airline has 19 in-service aircraft, comprising Airbus A320 family jets, as well as A330s. Despite hope that recovery will improve now that the domestic situation has stabilised, Nuttall says the airline intends to restructure its balance sheet.
Nuttall says that while operating conditions are on the up, the airline is “tempered by its financial situation, and has got limited flexibility there”. Still, Nuttall notes that the priority will be to restructure SriLankan’s balance sheet.
Nuttall says SriLankan is “gradually shifting” eastwards to North and Southeast Asia, as well as the Pacific. “Australia, for example, is becoming [a] bigger and bigger [market] for us.” With a full fleet of 27 aircraft in the near future, Nuttall says the priority will be on restoring frequencies, as opposed to expanding its existing network. That India – a “sizeable market” with over a billion people – is its nearest neighbour also presents opportunities. Pre-pandemic, India accounted for about 20% of airline revenues, underscoring the significance of the market for SriLankan. Nuttall says the proportion has dropped to “just above” 10% since the pandemic, but notes that “this is the real longer term opportunity”.
“[India] is a massive market, and it’s becoming more and more affluent.” “The challenge is to make sure that we are trying to meet the needs of all of our long term strategic markets, and we need to meet the needs of our diaspora in Europe and the tourism markets from there.”
“I think there’s a lot of growth opportunity to be had around [our operating] model. And if we can do it well, it’s something we can defend, and we can be a major player.”