The Hon. Janitha Ruwan Kodithuwakku - Deputy Minister of Ports and Civil Aviation

¶ 01 Thank you, Hon. Presiding Member. Before today’s subject, let me highlight an overdue but vital step for our aviation sector: for the first time we are launching the National Aeronautical Search and Rescue Committee at 3.00 p.m. today, bringing together the Tri-Forces, Disaster Management Centre, Ministry of Health, Ministry of Finance, and others. Incidents like the X-Press Pearl fire showed we had no coordinated emergency response protocol across Government entities. This committee will establish that protocol, including responses to potential aircraft incidents.

¶ 02 Sri Lanka, as an island nation, depends on air and sea routes. Our Flight Information Region (FIR) spans about 528,000 square nautical miles; we are custodians of significant airspace, and efficient airports directly affect tourism and the national economy. Tax and fee policies for airports and ports must be designed not merely for immediate profits but aligned with national economic goals. On that basis, we have submitted the relevant Extraordinary Gazette notifications.

¶ 03 On Embarkation Tax: Sri Lanka charges US$60 from all departing passengers, with exemptions for children under 5, passengers in transit under 24 hours, and airline crew. In 2020, a decision was taken to reduce certain applicable taxes to support the economy. We are extending that decision for one more year. There are questions about national economic impact; I will clarify with data.

¶ 04 Mattala Rajapaksa International Airport (MRIA): We have fully exempted Embarkation Tax for passengers departing via Mattala. Built in 2013 at US$250 million (about Rs. 75 billion), with US$190 million in loans, MRIA has accumulated losses of about Rs. 60 billion by now—nearing the construction outlay. Over 13 years, no adequate plan was executed. However, we have recently increased passenger movements. This year alone MRIA will handle about 80,000 passengers; its design capacity is 1 million per year. In 2023 it handled 132,000, i.e., roughly 15% of capacity. Prior investments targeted a single segment; we will now call new proposals across seven sectors because MRIA cannot be sustained by passenger operations alone. We will invite investment for: - Maintenance, repair and overhaul (MRO) - Flying school - Logistics services - Resort hotels, hospitality services and hospitals - Industrial park - Renewable energy industry - Aircraft spare parts manufacturing and storage, and a cargo hub

¶ 05 Bandaranaike International Airport (Katunayake): For years, the second terminal stalled (a Japanese contractor withdrew before we assumed office). BIA’s designed capacity is 6 million passengers per annum. Last year we handled 8 million; with tourism recovery, we aim for 10 million this year—operating beyond designed capacity. To improve efficiency, by year-end we will install four electronic gates (eGates) with automated immigration counters, and we plan to award the Terminal 2 contract by September.

¶ 06 On Embarkation Tax collections and compliance: While we have reduced certain elements, between 2022 and now, according to airlines’ reports, about US$27.7 million should be due in aggregate Embarkation Tax remittances to the Civil Aviation Authority. The airlines collect from passengers and must remit to the CAA, but our Act lacks strong enforcement provisions. We have begun drafting the necessary legal instruments to ensure compliance and recovery. Ensuring competitive ticket pricing will attract more passengers and benefit the tourism industry.

¶ 07 Jaffna International Airport: When we took office, JIA had only one destination (Chennai). Now we operate daily flights to Trichy, Chennai and Palaly sectors. Developing new destinations is key to tourism growth. We will invest Rs. 750 million this year to build a new terminal building, and aim to run Jaffna Airport at optimal capacity by year-end.

¶ 08 Regarding the debate today, criticism should be fair. Allegations such as “we hid in a room to sell vehicles of the Presidential Secretariat” are not fair. Similarly, politically weaponising a few words about war heroes to create division is not fair. I have presented substantial data and plans on airports and economic impacts. Please question us on that—we are ready to answer, including the impact of Embarkation Tax adjustments.