The Sri Lankan government has decided not to proceed with the planned LKR250 million Sri Lankan rupee (USD1.4 million) expansion of the SriLankan Airlines Catering kitchen at Colombo International, the local newspaper Daily FT said. Instead, the new strategy aims to improve productivity and maximise existing capacity to remain price competitive.
The flag carrier's expansion plans for its profitable catering subsidiary received approval in August 2019. However, newly appointed Tourism Minister Prasanna Ranatunga announced its reversal on January 27. “We have decided not to go ahead with the SriLankan Airlines Catering flight kitchen expansion after much observations from employees and experts in the field."
It was the minister's opinion that the catering outfit still had excess capacity, manpower, and machinery to increase its productivity. The proposed expansion, which would have taken two to three years to complete, would have seen the company be able to provide 40,000 daily meals, up from the 23,000 it currently serves. Some of the airline customers using the firm's kitchens include Qatar Airways, Malaysia Airlines, TUI Airways, KLM Royal Dutch Airlines, and IndiGo Airlines.
The minister also alleged that the company was expensive and trying to create a monopoly at the airport. “Some of the airlines that are operating to Colombo aren’t customers of SriLankan Catering as it is expensive. They are acting like a monopoly and if we continue to do business this way, I have no doubt that we’d have to shut down this company,” he said.
Despite 7-8% year-on-year growth in traffic at Colombo, SriLankan Airlines Catering witnessed its total meal production drop by 5% to 5.5 million meals in FY2019. Despite that performance, the company's revenue increased by 13% to LKR9.75 billion (USD54 million) in FY2019, and net profit improved by 44% to LKR5.6 billion (USD31 million), with its net profit margin increased from 45% to 58%.
