May 15, Colombo: CAPA - Centre for Aviation, a leading provider of research and analysis for global airline industry says Sri Lanka is too small to operate two state-owned airlines, as its budget carrier Mihin Lanka prepares to introduce business class from this month.
The leading provider of independent aviation market intelligence, analysis and data services, covering worldwide developments suggests merging the budget carrier Mihin Lanka with the national carrier Sri Lankan Airline.
According to a recently report released by CAPA Mihin Lanka plans to transition from A320 family aircraft to 737-800s and introduce a business class from 25-May-2014. However, Sri Lanka's government-owned budget carrier is expected to remain very small with a fleet of only three aircraft.
While Mihin Lanka has had some success opening secondary routes, the carrier is too small to generate any significant economies, the report says.
CAPA suggests the Sri Lankan government to relook at the business case for Mihin Lanka and consider merging the carrier into the flag carrier SriLankan Airlines. It says a merger before the implementation of the re-fleeting plan would be logical.
Sri Lanka's two carriers are both fully government-owned and codeshare on some routes, but are separate companies. Both airlines are operating at losses.
"It is hardly a typical two-brand strategy, but Sri Lanka's politics-riddled aviation policy is hardly a sound one," the report notes.
CAPA delivers market analysis and data that support strategic decision making at many of the world's most recognized organizations.