To succeed Air Ceylon, Ltd. (founded in 1949), which had ceased trading at government request on March 31, 1978, and to spur tourism, President J. R. Jayawardene specifically orders the creation of a national airline. With seven-year tax-free status, the carrier is formed at Colombo on January 10, 1979 by combining the assets of Sri Lanka Airways, Ltd. and Sri Lanka International Airways, Ltd., which had been formed the previous January and had begun operations in April.

Principal owners are the government (60%), two national banks and the Ceylon Shipping Corp. (40%), with initial capitalization set at $15.7 million. Captain S. Rakkhita Wikramanayake is named chairman/managing director under a management contract signed with Singapore Airlines, Ltd. for which he had previously flown. International flight services from Colombo to Bangkok and Singapore begin on September 1 with two leased Singapore Airlines Boeing 707-312 Stratoliners.

Ceylon Airways, Ltd., which had continued flying its Trident 1E and Avro 748 until the new entity was ready for launch, now quietly fades away under liquidation. After a two-year cessation of European services from Sri Lanka, flights to the major cities of London, Paris, Frankfurt, and Zurich are now resumed. A B737-212, also leased from Singapore Airlines, Ltd., arrives in the spring of 1980, allowing regional services to begin in April from Colombo–Bombay and Madras. In June, the company begins to share revenues with Indian Airlines Corporation (IAC) on a route from Colombo to Madras, Tiruchirapally, Bombay, Trivandrum, and Delhi. A route is opened to Hong Kong by the Stratoliners, which will be maintained there by HAECO.

An initial Lockheed L-1011-50 is received in the fall and launches flights Colombo–Paris (ORY) on November 2. An annual $34- to $40- million injection of government funding begins at year’s end and the airline, labelling itself “A Taste of Paradise,” begins an intensive marketing campaign aimed at attracting tourists to Sri Lanka, “Paradise Island.”

During 1981–1982, 2 L1011-500s and 1 L1011-100, the latter leased for a year from Air Canada, Ltd., are placed into service on routes to Amsterdam, Copenhagen, London, Rome, Vienna, Zurich, Abu Dhabi, Bahrain, Dhahran, Doha, Dubai, Kuwait, Muscat, Hong Kong, Bangkok, Kuala Lumpur, Tokyo, Singapore, Karachi, Trivandrum, and Tirushirapelli. Enplanements in the latter year are 590,000.

Expansion of the Colombo technical base is begun in 1983 with a projected 1985 completion date. The fleet now includes 5 Lockheed L1011s and 1 Boeing 737-200. Arrangements are completed for the purchase of 2 Boeing 747-238Bs from Qantas Airways Ltd. A total of 598,000 travellers are carried on the year; freight jumps 14.9% to 45.42 million FTKs. Airline employment reaches 2,602 in 1984. A major cost-cutting campaign is undertaken and the first Australian B-747-238B is delivered on June 8; named King Vijaya, it is placed on the European routes to Zurich, Paris, and London, as well as services to Dubai, Muscat, Karachi, and Singapore. The Singapore destination is suspended late in the year. Freight traffic soars 34.7% to 60.23 million FTKs and passenger boardings jump 10.7% to 681,000. The workforce grows 13.8% in 1985 to 3,798. In cooperation with Malaysian Airline System (MAS) under a marketing agreement signed in February, joint service is inaugurated in April between Colombo and Kuala Lumpur; the second ex-Qantas B-737-238B is delivered on October 23 and named King Tissa. Singapore service is resumed, but the addition of the second Jumbojet creates an overcapacity problem that is solved by leasing two TriStars to British Airways, Ltd. for a three-year period.

The technical base at Colombo is completed and features a $13.5- million, Canadian-built hangar large enough for three wide-bodied aircraft. The airline’s catering and duty-free services receive special recognition and awards; however, ethnic violence increases dramatically. Cargo is up 9.3% to 65.66 million FTKs and passenger bookings rise 2.5% to 698,614. Employment grows 1.7% in 1986 to 3,861. At the end of March, the two 747 Jumbo jets are taken out of service and leased, the King Vijaya to Qantas Airways for 20 months and the King Tissa to Egypt Air, for an year.

On May 3, Tamil separatists plant a bomb in the cargo hold of Flight 101, the L1011-50, which explodes while 128 passengers are boarding on the ramp at Colombo Airport (18 dead, 40-plus wounded). While being loaded for a service from Colombo to Male, the L1011 TriStar 100 'City of Colombo' is damaged. While repairs are underway, a bomb, hidden in the ship’s “Fly Away Kit” explodes, destroying the Lockheed. The blast destroys all of the glass in the front of the airport terminal building and photos of the disaster, the airline’s first fatal incident, are a public relations disaster. The government orders all Tamils employed at nonexecutive levels placed on paid leave, which severely impacts the carrier’s engineering department. A customs agent will later be arrested as the perpetrator.

The B747-238B King Tissa, leased to Egypt Air becomes available and is reintegrated as the search for TriStar replacements begins. Route and other expansion plans are placed on hold as the government initiates an official presidential investigation into corruption and inefficiency. Having been made the scapegoat for the line’s bad luck, Chairman Wikramanayake resigns on November 26 and, on the financial front, the company loses the tax-free status granted at start-up.

Customer boardings decline 12.5% to 611,434 and freight drops 20.1% to 52.48 million FTKs. An operating loss of $3.8 million is suffered. The payroll inclines upward again in 1987 by 3.5% to 3,626. The two leased Jumbojets come back in and are sold back to Qantas Airways. Having been found wanting by the previous year’s government investigation, Air Lanka receives a new board of directors in January; Lakshman de Mel succeeds Wickramanayake, but after November’s national elections, he is followed in December by John Fleming. Passenger boardings dip an additional 3.8% to 588,440 and cargo is off 11% to 46.73 million FTKs. Revenues advance 3.4% to $132 million and costs drop 1.8% to $129 million. The operating profit is $2.99 million.

The personnel boost is smaller in 1988, but still 0.6% higher, to 3,648. New service is extended to Riyadh. A long-term equipment program is planned that will bring in 10 new jetliners to replaced the Lockheeds. Customer bookings rebound, climbing 19.4% to 702,606, as freight increases 29% to 59.93 million FTKs.

The workforce is decreased by 9.3% in 1989 to 3,308 and the fleet now includes 2 L1011-500s, 1 each L1011-50/100 and B737-2A6A. In May, a code-sharing agreement is signed with Gulf Air, Ltd. covering joint operations to Bahrain and Muscat. The contract of CEO John Fleming is not renewed when it expires on June 30. Another new chairman/managing director, Dunstan Jayawardena, is named and he receives a mandate from President Ranasingho Premadasa to make the airline succeed or shut it down.

Passenger boardings ascend 6% to 744,494 and freight moves upward 22.2% to 73.22 million FTKs. Income slightly exceeds costs and an operating profit of $3.3 million is generated—the first annual profit ever achieved.

Company employment inches upward by 0.6% in 1990 to 3,572 as Chairman Jayawardena’s fleet is enhanced through the addition of a third L1011-500, leased from Royal Jordanian Airlines. The new unit is employed to inaugurate services to Australia in the spring—35 frequencies to Sydney and Melbourne.

Revenue pooling begins with Pakistan International Airlines (PIA) during July on routes from Colombo to Karachi, Karachi to Bombay, and Male to Colombo.

Customer bookings rise 19.7% to 891,791 and cargo swells 24.5% to 91.19 million FTKs. Revenues advance 52.6% to $209.9 million and with expenses low, operating income swells to $11.26 million and net profit reaches $7.2 million.

The payroll is cut 7.6% in 1991 to 3,300. The fleet is unchanged since 1989, although orders are outstanding for 2 Airbus Industries A320-231s and 5 A340-311s. A Swede, Erkki Mandelin, is appointed vice president of engineering and maintenance.

Traffic moves ahead as passenger boardings inch up 0.7% to 897,802 and freight jumps 8.2% to 98.7 million FTKs. Income exceeds expenses and there are profits: $12.3 million (operating) and $7.7 million (net). The employee population is increased by 12.8% in 1992 to 4,229 and the fleet now includes 7 Lockheeds and 2 Boeings. Two more TriStars are leased from British Airways, Ltd. in August. Brian Coombes is appointed CEO in November.

Customer bookings increase 17.3% to 1,053,189 while cargo advances 11.3% to 109.85 million FTKs. Revenues ascend 20.3% to $289.5 million and expenses rise 26.1% to $287.9 million; the operating profit is cut to $1.64 million and there is a $4.4-million net loss.

In 1993, the workforce of Chairman Attygalle is cut by 3.3% to 4,091. The first of two A320-231s arrives in January and enters service in February; it is followed by the second in April. During the summer, the lone remaining B737-200, employed on regional routes, is withdrawn and Royal Jordan Airline’s Lockheed is returned.

The route structure is now rationalized and markets dropped are Berlin, Munich, Vienna, Brussels, Sydney, Melbourne, and Jakarta. Destinations visited from Colombo include Abu Dhabi, Amsterdam, Bahrain, Bangkok, Bombay, Delhi, Dharan, Dubai, Frankfurt, Fukuoka, Hong Kong, Jeddah, Karachi, Kuala Lumpur, Kuwait, London, Madras, Male, Muscat, Paris, Riyadhi, Rome, Rumjatar, Singapore, Tiruchirapalli, Tokyo, Trivandrum, and Zurich.

Partial privatization begins and, in November, code-sharing and joint operations begin with Middle East Airlines, on a route from Colombo to Beirut. Passenger boardings climb 5.1% to 999,585 while freight declines 4.9% to 104.43 million FTKs. Revenues fall 8.5% to $264.9 million and with costs under control; an operating surplus of $13.7 million is generated. Net gain reaches $5.4 million.

The employee population grows a strong 8% in 1994 to 4,417. On August 19, following lengthy negotiations with the manufacturer and the completion of arrangements with a consortium of international banks, the company becomes the first in Asia to take delivery of an A340-311. The World Bank criticizes the acquisition as extravagant and the orders for two more of the aircraft beyond the original three are cancelled. The premier A340-311 enters service on September 25 on the routes from Colombo to Amsterdam, Paris, Hong Kong, and Tokyo.

For the year, overall customer bookings ascend 7.4% to 1,073,489 while cargo recovers, up 5.3% to 109.95 million FTKs. Revenues rise 2.5% to $271.4 million and permit profits of $24.07 million (operating) and $7.24 million (net).

Another 28 employees join the company in 1995. The recovery from depression being enjoyed by the world airline industry continues to make its way, at least partially, to Sri Lanka. Meanwhile, in January, the government announces airline privatization plans.

Passenger boardings increase by 8.4% to 1,163,586 while freight swells 42% to 156.16 million FTKs. Operating revenues advance by 7.3% to $291.15 million and expenses are up by 2.1% to $252.55 million. Although operating income climbs to $38.6 million, net gain falls to $2.02 million.

Airline employment stands at 4,000 in 1996 and the fleet now includes 3 A340-311s, 2 each A320-211s and Lockheed L1011-500s, and 1 each L1011-1 and L1011-100.

In April, the company enters into a code-sharing arrangement with British Midland Airways, Ltd. covering flights from Colombo via London (LHR) to Belfast, Edinburgh, Glasgow, Leeds/Bradford, and Teesside.

Customer bookings inch up 1.7% to 1,183,283 and 159.4 million freight FTKs are operated, a 2% increase. Operating income slides to $285.5 million, but costs allow a $28.1-million operating gain and a $2.9-million loss.

The workforce swells 24.1% to 4,965 during 1997. For the third time in two weeks, a near-midair collision over India occurs on January 11. A company A320-211 on approach to Bombay from Trivandrum is mistakenly authorized by an air traffic controller to land at that city’s airport at the same time he has granted permission to land to a Kuwait Airways Corporation B747-269BC; a collision is avoided by several hundred feet.

The government, later in the year, makes plans to sell up to 40% of the carrier early in 1998. Passenger boardings rise 4.8% to 1,239,613 while cargo does twice as well, climbing 9.6% to 174.24 million FTKs.

On March 30, 1998, the available 40% stake in Air Lanka, Ltd. is purchased by Emirates Airlines, Ltd. for $70 million. Under terms of the equity sale, the government of Sri Lanka will hold 51% majority control and the remaining 9% is distributed among the airline’s employees. The Arab carrier’s funding passes to Air Lanka, Ltd. in two tranches, beginning with $45 million up front on signing day. Management of the carrier passes to Emirates under a 10-year contract when the arrangement is finalized in May.

On April 1, the carrier orders 6 Airbus Industries A330-200s with which to replace its aging fleet of L1011s and the 2 A320-211s. The former, to be powered by $150-million worth of Rolls Royce Trent 700 engines, are scheduled for delivery beginning in October 1999. Plans are made to begin flying to points in Africa, Australia, and New Zealand and to increase frequencies to Europe.

Customer bookings fall 6.7% to 570,000 while freight traffic is down 9.3% to 77.73 million FTKs. It is announced on January 27, 1999 that, after heavy (albeit undisclosed) losses in previous years, the company earned a $23.3-million net profit in 1998.

An announcement concerning the first major service enhancement in some time is made on May 14. Employing the first of the new long-haul Airbus jetliners to be delivered in October, the company will, on November 12, launch twice-weekly roundtrip service from Colombo to Stockholm via Dubai. Connections will be provided to the Maldives, Sydney, Singapore, Bangkok, and Hong Kong. From December 5, the frequency will be increased to thrice weekly.

In early May, arrangements are completed with Airbus Industries for the seven-year lease of a pair of A340-312s originally chartered to Gulf Air Company.

The first aircraft, wearing the new flying peacock logo of the airline, is delivered on June 13, on which day the company is renamed Sri Lankan Airlines, Ltd.

The Airline Encyclopedia 1909-2000