The Ports and Aviation Ministry`s failure to extend on time the licences of airline operators, whose licences had expired, has jeopardised the future of three budget airline projects, including a Rs.13 billion investment recently cleared by the BOI.
The government in December 2005 had issued licenses to three operators who applied to operate international budget airlines from the Colombo hub. The three were Expo Aviation, Deccan Aviation and the Holiday Air.
A spokesman for one of the affected airlines, under condition of anonymity, said that when they had approached the Airport and Aviation Services Ltd. to make preliminary arrangements for operations in 2005, they were informed in writing that the Katunayake Airport was undergoing a major renovation project and would only be able to facilitate such operations after March 2007.
He said their operator licenses had expired in September 2006 and thereafter they had applied to the Civil Aviation Authority (CAA), requesting an extension, quoting the letter from the Airport and Aviation Services Ltd. as an excuse for failure to launch operations on time.
The source said that the CAA has replied them that the matter has been forwarded to the Minister of Aviation, but though seven months have passed, there is on time no conclusive decision.
He said that the CAA`s failure to respond to the issue has put their investment in deep trouble as the BOI last month had given a fast track clearance to the project, under condition of quick implementation.
In the meantime, the government launched a state owned budget airline, Mihin Air, in March, with the President Mahinda Rajapakse`s Personal Assistant Sajin Vaas Gunawardane as its CEO. There is speculation in aviation circles that the government is attempting to create a monopoly in the budget liner operations by blocking competitive lines coming into operation.
An Industry source said that such a move would convey wrong signals to possible investors in the country about invisible barriers, though the BOI is chasing a target of attracting US$ 3 billion in investments by the end of the year.
Port and Aviation Ministry Secretary Tilak Kollure and the Acting Director General of Civil Aviation Parakrama Dissanayake were not available to comment.