COUNTRY REPORT FOR

SRI LANKASAARC MULTIMODAL REGIONAL

TRANSPORT STUDY 2005

Sri Lanka

� Land Area 65,510 sq km.

� Population 19.5 million

� GDP US$ 20.1 bn

� Per capita US$ 1070

� Economic Growth Rate 4.7% p.a.

Trade

� The value of Sri Lanka’s exports/imports to the rest of the world grew strongly (by around 8 percent per year) over the period 1985-2003.

� Sri Lanka’s external trade between the other SAARC countries for the period 2000-2004 accounts for 1/3rd of the total trade between all SAARC countries, with Sri Lanka/India trade volumes accounting for around 30%.

Trade Agreements

� The potential to expand intra-regional trade rapidly from a low base, by liberalizing bilateral trading arrangements is well illustrated by the experience of India and Sri Lanka following the implementation of a free trade agreement between them in 2001. In the following year (2002), the value of the bilateral trade between India and Sri Lanka registered a 48 percent increase.between India and Sri Lanka registered a 48 percent increase.

� In 2004, Sri Lanka and India agreed to convert the Indo-Sri Lanka Free Trade Agreement (ISLFTA) into a Comprehensive Economic Partnership Agreement (CEPA) incorporating trade and service agreements.

� The Pakistan-Sri Lanka Free Trade Agreement (PSLFTA) was signed in February 2005.

Aviation

� Sri Lanka has one international airport which is the Bandaranaike International Airport (BIA) located 32 kms north of the centre of Colombo. During the year 2004, 37 international airlines, including 8 cargo airlines, operated in Sri Lanka. There were 4.1 million passengers who passed through the BIA with transit passengers making up around 15%. There were 145, 647 tones of freight tonnage handled by the BIA.

� Air Traffic at BIA has steadily increased with an average annual growth rates of 7.9 % for international passengers since 1990.

� Air Cargo presently 145,000 tonnes expected to increase by around 10% p.a.

� Currently completing a development plan for BIA which will provide capacity till 2010.

Growth of Traffic with India

� Last 3 Years

� Operators have increased from 3 to 5 with 2 private operators also coming in.

� Traffic has doubled (growth rate of around 30%)� Traffic has doubled (growth rate of around 30%)

� Destinations doubled from 5 to 10

� Fares have come down by around (30% nominal terms)

Sri Lanka handles

About 15% of International TravelAbout 40% of Intraregional Travel

Policies & Agreements

� Existing policies of the Government of Sri Lanka with respect to the aviation sector are:

� Foreign Charter & Freighter operators being allowed operations to Sri Lanka under an ‘open skies’ policy.

� Fifty Nine (59) bilateral air services agreements under the Governments pursuit of a liberalized market access on a Governments pursuit of a liberalized market access on a reciprocal basis. Of these five are with SAARC countries with Sri Lanka having direct flights between 3 of the SAARC countries at present. These are India, Maldives and Pakistan. There are 106 direct flights per week to 10 Indian cities with 5 flights per week to Karachi in Pakistan and a further 27 flights per week to the Maldives.

Air Services Agreement in SAARC

� India: (operations to 10 destinations in India, a further 15 approved- but low traffic, 5th freedom allowed to other SAARC countries under conditions).

� Pakistan: (5th freedom allowed to SAARC countries)� Pakistan: (5th freedom allowed to SAARC countries)

� Bangladesh: (allowed, but not considered feasible by main operators, 5th freedom restrictions apply)

� Maldives: (5th freedom allowed on case by case basis)

� Nepal: (allowed, but not considered feasible by main operators, 5th freedom restrictions apply)

SAARC Country Airport Airport

Code

Carrier

(Airline

Code)

Flights

per

Week

India Delhi DEL UL 7 + 7

Bombay BOM UL 4 + 4

Tiruchchirapalli TRZ UL 10 +10

Trivandrum TRV UL 12 +12

Cochin COC UL 11 +11

Bangalore BLR UL 7 + 7

Calicut CCT UL 9 + 9

Chennai MAA UL 15 +15

Chennai MAA IC 7 + 7

Chennai MAA JAI 7 + 7

Chennai MAA SAH 7 + 7

Hyderabad HYD UL 7 + 7

India/Pakistan Karachi / Bombay KHI/BOM UL 3 + 3

Pakistan Karachi KHI PIA 2 + 2

Maldives Male MLE UL 15 +15

Male MLE Euro Fly 1

Male MLE EK 1

Dubai / Male DXB/MLE EK 6

Narita / Male MLE UL 2

London / Male MLE UL 2

KL / Male MLE MAS 1

Male / Dubai MLE/DXB EK 5

Male / Vienna MLE/VIE Al 1

Male / Düsseldorf MLE/DUS LTU 1

� The aviation industry sees no major constraint with respect to the airport infrastructure as such.

� However a number of other aspects were highlighted as constraints. These are;� High ground handling charges prevents the overall growth of passenger traffic

arriving at the BIA and therefore the progress of connectivity to other SAARC countries.

� The Ground Access to the BIA for attracting transit passengers with stop over packages. This is seen an impediment for passengers especially from the Maldives, southern India and Bangladesh.

� Low Cost Carrier to introduce low-cost airlines in the SAARC region to tap in to this vast market. It is held that such an initiative will see a phenomenal

� Low Cost Carrier to introduce low-cost airlines in the SAARC region to tap in to this vast market. It is held that such an initiative will see a phenomenal increase in air travel within the SAARC region.

� Fully fledged Open Skies policy for Passenger Travel which would encourage the commercial viability that could sustain the development of air services between points in SAARC countries which may have lower traffic loads at present.

� Liberalization of Air Services needed for developing air routes connecting Sri Lanka to other SAARC destination to its true potential. On routes where this has been carried out, the fares on have reduced, while frequencies and destination have increased rapidly

Forecasting of Passenger Demand

� Several models have been used. E.g.

� Y = exp (-2.694157) * X1 1.442112 * X2 0.019790 * X3 -0.046059

� Where, Y is the total passengers for the year,� X1 is the GDP of Sri Lanka in constant Rs million;� X2 is the aggregated average growth rate weighed by foreign countries

GDp (1985 = 1.0) and� X3 is the Index of Terrorism, adjusted by the method of ‘centering

repeated 3 term moving average’

Actual Forecast

Low Medium High

2004 4,069,721

2010 6,409,548 6,493,606 6,578,364

7.9% 8.1% 8.3%

2015 8,775,405 9,185,271 9,612,258

6.5% 7.2% 7.9%

2020 11,861,757 12,829,042 13,870,301

6.2% 6.9% 7.6%

2025 16,038,022 17,924,371 20,022,764

6.2% 6.9% 7.6%

Land Transport

� As Sri Lanka, is an island, and as there is no land bridge across the Palks Strait are no Regional Roads or Railways at present. There is presently no agreement between Sri Lanka and India to study the possibility of such a land bridge, even though there have been sporadic attempts to commence such a project, over the last three decades.

� The Sri Lanka Railway has a relatively small and mainly broad gauge (1,676 mm) railway, with a route network length of about 1,640 track km. comprising several lines. km. comprising several lines.

� The inventorized length of roads is at present 96,346 kms, returning a road density of 1.47 kms per square km of land area. The estimated road length is however 108,000 kms with over 25,000 in paved condition. The active motorized vehicle fleet which is around 1.2 million vehicles at present, has been growing by between 5 to 8 percent per annum over the last decade.

Maritime Ferry Services

� One of the railway lines is from Colombo, north bound to Talaimannar Pier on the northwestern coast of Sri Lanka opposite Rameswaram, located across the Palk Strait in Tamil Nadu State of India.

� Both lines have been designated links in the Trans-Asian Railway (TAR). However, service has been suspended on the northern section of this line from June 1990, due to the civil northern section of this line from June 1990, due to the civil conflict in the north and northeast.

� Even though there was a bi-lateral agreement to connect the Sri Lanka railway at Talaimannar with the Indian Railways at Rameshwaran, by a ferry service, this was abandoned in the mid 1980s due to civil strife in the northern areas of Sri Lanka. In 1984, this service had carried around 120, 000 passengers per annum.

To Cochin

Proposed Ferry Services

� Proposed Colombo to Tuticorin Ferry Service. � The distance between Colombo and Tuticorin is approximately

140 nautical miles or 260 km. A shipping service operated between Colombo and Tuticorin before India and Sri Lanka received independence in 1947. This service was suspended in the wake of civil unrest in the immediate post-independence era. Two decades ago, both countries decided to revive this link and a passenger jetty was constructed at Tuticorin for this purpose, but the proposal was dropped following the outbreak of civil conflict the proposal was dropped following the outbreak of civil conflict in Sri Lanka. Both governments recently (2004) indicated their approval in principle to a re-launching of this service, but concerns by the government of Tamil Nadu The ferry was to be equipped with a Roll-on-Roll-of (Ro-Ro) deck and would carry buses and trucks, in addition to private cars.

� Proposed Colombo to Cochin Ferry Service� An alternative proposal was discussed between the national

governments of India and Sri Lanka for the establishment of a ferry service between Colombo and the Port of Cochin in Karnataka State of India. The distance involved is 310 nautical miles, or 574 km.

Maritime Container Services

� Sri Lanka is on a principal maritime route from the period early discoverers set sail in their sailing craft and other seagoing vessels.

� In recent years, there is a great desire and ambitious plans are being formulated to make Sri Lanka as a Mega Hub port, to be the Gateway to the Indian sub continent. Colombo Port had a rapid growth during the 90’s averaging 20% pa until 1998 when the growth came to a standstill.

� Growth resumed at 11% in 2003. Transshipment accounted for about 70% of Colombo’s total container traffic. Out of which more than three quarters of this transshipment is traffic to and from the ISC region comprised of India, Pakistan and Bangladesh.

� When traffic distribution is analysed between 1998 and 2002, the transshipment share of total ISC cargo declined from 52% to 45% as direct calls increased.

Sri Lanka handles1/3rd of International TEUs

Constraints & Development Strategies

� Aviation� Infrastructure: plans in place for growth till 2010 (6 million pax p.a.-

funding being sought for next stage.� Regulations/Services:

� Low Cost Carriers� Open Skies Policies� Unrestricted traffic rights

� MaritimeMaritime� Infrastructure: Present capacity 3.5 m TEUs, capacity till 2008. Plans in

place for expansion of Colombo Port to 6+ million TEUs (post-panamax vessels) and 06 smaller port developments funding is sought

� Regulations/Services: � Continuing liberalisation of trade, development of regional ports. � Passenger ferry services need to be resumed

Constraints & Development Strategies

� Land Transport� Infrastructure: Land bridge with India for Rail & Road traffic may be

pursued. � Services: Standardisation of Road and Railway regulations & designs.

� Ferry Service� Ferry Service� Infrastructure: New terminals required in Sri Lanka and India� Regulation/Services: Approvals required, private operators interested.

� Other� Multi modalism� Choice of Services� Generating new traffic and new trade

ExistingTrade Potential

Transport

Trade Barriers

Increased Trade Potential

Transport Infrastructure

Actual Trade Volume

Lower Transport Costs