The Outbound Airline Industry in Sri Lanka.

Post war development in Sri Lanka is taking place at a slow but steady pace and has created an
impact on all industries in different ways. Unfortunately the maximum benefits of this
development could not be achieved due to the economic crisis experienced the world over in the
past 2 years. The primary stakeholders of the industry are passengers, travel agents, airlines,
Global Distribution Systems (reservation systems), regulatory bodies (CAA, IATA). Sri Lankan
airlines the National carrier is also responsible for the ground-handling operations at the Colombo
airport. Over 20 International carriers operate daily, ranging from full service airlines to budget
and even charter flights. The country also boasts of almost 200 IATA appointed travel agents
with the highest density of them being in the commercial capital Colombo. Kandy & Kurunegala
would make up the highest number of travel agents outside the commercial capital. Owing to
post war development the North and East can also be identified as potential new markets.
In line with the countries development the government has also embarked on a project in the
south of the country to build its 2nd international airport in order to better facilitate tourism within
the country and to enhance the strategic location of Sri Lanka on the world map.

This industry caters to many market segments consisting from students, traders, corporate,
holidaymakers, migrants and labor movement. The product offerings are customized according to
their needs. Student traffic is a vastly growing market in the country with many young scholars
choosing countries such as Australia, Nepal, China, India, UK and even Singapore to broaden
their academic horizons. Moving on to the leisure traffic, the most popular option with most
would be, Singapore, Malaysia and Bangkok but the high income earners may choose
destinations such as Europe, USA or even Honk Kong for their vacations, these however are
limited to a few members of society that have a very large disposable income. Some other
popular destinations for group travel have been Philippines, Indonesia, Vietnam and China. There
also seems to be a very niche market for golf enthusiast to the above-mentioned destinations.

The market is mainly driven by Travel agents, which contribute almost 90-92% of the total
tickets sold. The balance 8-10% would be from direct airline sales (online & offline) and the
Internet penetration rate has seen a steady rise in the past 2 years to attribute to almost 8% of all
airlines ticket sales. This would mainly be due to the improvement in the IT knowledge of the
consumer increasing and the airlines offering attractive deals for those Internet savvy consumers.
The travel industry in has seen a slow & steady improvement in the past year but is easily
manipulated due to volatility of the macro economic factors in the local as well as the
international market. For example the increases in crude oil prices in the world market would
have a direct impact in the pricing structure of airlines.

In lieu of the increase in demand for air travel most airlines have invested by increasing
frequency to Sri Lanka whilst introducing more innovative and technologically advanced
products.