Strategic asset or economic burden? The debate over Hingurakgoda Airport’s new role

By Rasanga Kumarihamy

Introduction

Sri Lankan aviation stands at a pivotal moment as it considers the transformation of Hingurakgoda Airport, also known as Minneriya Airport, from a primarily Air Force facility to a fully-fledged international civilian airport. This initiative, underlined by a substantial Budget of Rs.2 billion (about $ 6.5 million), has enthused a national debate. It’s not merely a matter of financial allocation but also financial economics with extensive consequences that could reshape Sri Lanka’s aviation landscape and its position in regional connectivity.

The Government’s plan for the Hingurakgoda Airport is marked by ambitious upgrades, including runway extensions, advanced air navigation systems, a new passenger terminal and a state-of-the-art Air Traffic Control (ATC) tower, which would require a massive budget beyond the proposed allocation. These developments aim to elevate the airport from its current military utilisation towards serving a growing international civil aviation demand. However, this move raises crucial questions about its necessity and practicality, especially, in a nation with five international airports.

Critics point out that such a significant investment might be overreaching, given Sri Lanka’s existing aviation infrastructure and the country’s pressing economic challenges. The suggestion is that these resources could be more beneficially deployed in other critical sectors needing attention, or it’s about assessing the airport’s financial viability and potential role in boosting tourism and local development. The experience with underused facilities like the Mattala Rajapaksa International Airport (MRIA) appears over this project, indicating that the demand for another international airport might be overestimated.

The strategic aspect of this upgrade cannot be overlooked either. While specifying that international connectivity aligns with Sri Lanka’s broader objectives, it also necessitates careful consideration of national security, given the airport’s military significance. Thus, this decision isn’t just about financial investment; it’s a complex interplay of economic viability, tourism potential, local development, and strategic positioning.

 The current state of Sri Lanka’s airports

Despite its relatively small geographic size, Sri Lanka has five international airports. The Bandaranaike International Airport (BIA), the largest among these, operates near its full capacity, serving as a central hub for international and domestic flights. The MRIA is on the other end of the spectrum, built at a cost of $ 243.7 million. It has been debated over its underutilisation and  commercial viability. This presents the contrasting scenario of one airport being stretched to its limits while the other stands as a complex picture in Sri Lanka’s aviation landscape.

The prospect of adding another international airport into this mix, especially, when existing facilities like the MRIA, which had incurred a loss of Rs. 42.1 billion for five years since 2017 are not fully optimised, raises valid concerns. Critics question the practicality and necessity of investing in a new international airport in Hingurakgoda, arguing that it might not be the most efficient use of resources, particularly, in a climate where several existing airports have not reached their full potential.

 Economic considerations and setting priorities

The decision to allocate significant funds towards the development of the Hingurakgoda Airport is contemplated when Sri Lanka is navigating through economic challenges. The investment is a matter of expanding aviation infrastructure and prioritising national economic interests. Critics suggest these funds might yield a higher return if redirected towards more pressing needs.

An alternative suggestion is the enhancement of tourism infrastructure. Given the pivotal role of tourism in Sri Lanka’s economy, investing in projects that directly boost this sector could offer prompt and tangible benefits. This includes not just the development of tourist hotspots but also improving access to these destinations through better transportation networks.

Another consideration is the development of domestic airports, like the Sigiriya Airport, where the runway is in a sorry state. Improving these smaller airports could significantly impact internal connectivity, facilitating more accessible and efficient travel across the island. This approach supports the tourism sector and caters to the local population, providing them with more travel options and potentially stimulating regional economies.

Expanding Sri Lanka’s domestic air network

A critical aspect of Sri Lanka’s aviation sector is its domestic air travel network that is currently quite limited. Cinnamon Air and FitsAir are the sole scheduled domestic airlines, underscoring a crucial gap in the market. This limitation presents a considerable opportunity for growth and development. Expanding the domestic flight network could have far-reaching benefits, particularly for the tourism sector and the local populace.

Investing in the existing domestic airports and boosting their capacities can be a strategic move. Enhancements in domestic air travel would cater to the growing demand for internal travel and reduce travel times across the island. This improvement in connectivity could directly impact tourism, making remote and culturally rich destinations more accessible to international and local tourists. Furthermore, a robust domestic air travel network can stimulate economic growth in various regions, creating new business opportunities and jobs.

The strategic role of Civil Aviation Authority and SLAF

The transformation of the Hingurakgoda Airport into an international airport also highlights the critical roles of two key entities: The Civil Aviation Authority of Sri Lanka (CAASL) and the Sri Lankan Air Force (SLAF). CAASL, as the governing body for civil aviation, is instrumental in ensuring that the development aligns with national aviation policies and standards. It is responsible for ensuring that the expansion of Hingurakgoda Airport complements the existing airport network and supports the overall growth of the aviation sector in the country.

On the other hand, the SLAF that currently manages Hingurakgoda Airport, would face critical changes in its operations. This development may require the SLAF to adapt its functions or relocate, which could affect national defence and security. The integration of military and civilian aviation facilities needs careful planning and coordination to ensure that both, strategic defence and commercial aviation needs are met.

 The dilemma of selling strategic assets

The speculation about the future of Hingurakgoda International Airport, particularly regarding the probability of selling it to a foreign country, is a significant aspect in the ongoing debate. This concern is reminiscent of Sri Lanka’s previous experience with the Hambantota Port that was leased to China under a debt-for-equity swap agreement. The Hambantota deal that involved leasing to China for 99 years and the request for 15,000 acres of land around it for an industrial estate, was seen by some as a strategic move by China to increase its influence in the Indian Ocean region, and by others as a necessity for Sri Lanka in its quest for enhanced connectivity.

The leasing of Hambantota Port, seen by some as a necessary economic move and by others as a potential compromise of national interests, serves as a cautionary note. It highlights the delicate balance between seeking foreign investment and controlling strategic assets. The potential sale or lease of Hingurakgoda Airport raises similar concerns. Rumours are afloat that the BIA and MRIA would also be offered for either sale or lease on a PPP basis. However, such interventions require careful deliberation, transaction transparency, and balancing economic benefits against long-term national and regional implications. 

Learning from India’s privatisation of airports

In contrast to the challenges of asset privatisation, Sri Lanka can also look towards successful international models for inspiration, particularly India’s experience with airport privatisation. The Adani Group’s approach to airport management in India exemplifies a strategy that combines effective network management with diversified revenue streams, contributing to a sustainable and profitable aviation sector.

The Adani Group’s strategy involves creating a hub-and-spoke network that optimises operational efficiency and connectivity between major cities.  This model could be highly relevant to Sri Lanka given its similar geographic and economic context. Additionally, focusing on non-aero revenue streams, such as retail and real estate development within airport premises, presents a robust business model that Sri Lanka can emulate. These diversified sources of income help moderate the airports against market fluctuations and ensure financial stability.

Furthermore, India’s proactive approach to infrastructure development in anticipation of growing air travel demand offers valuable insights. Sri Lanka, facing potential growth in domestic and international air travel, could benefit from adopting a similar forward-thinking approach in its airport infrastructure development planning.

 

Striking a balance in development and strategy

The decision to upgrade the Hingurakgoda Airport to an international status is a multifaceted issue at the intersection of developmental ambitions and strategic concerns for Sri Lanka. While the upgrade aligns with the country’s goal to enhance its transportation infrastructure, it brings challenges spanning economic, strategic, and geopolitical realms to the forefront.

 From an economic standpoint, the project must be scrutinised for its long-term viability. Given the substantial investment involved beyond the initial cash outlay of about $ 6.5 million and the existing dynamics of Sri Lanka’s aviation sector, assessing whether this upgrade would yield the anticipated economic benefits is a necessity. This involves considering the potential for increased tourism and trade and understanding the impact on the country’s financial resources and economic stability.

The upgrade of the Hingurakgoda Airport also raises questions about strategic asset control, especially, in light of potential foreign involvement. The lessons from previous experiences, like the Hambantota Port lease, underscore the need for cautious deliberation. Maintaining control over strategic national assets is critical for preserving sovereignty and ensuring such decisions do not inadvertently compromise the country’s long-term security and regional standing.

Moreover, India’s past interest in acquiring what was referred to as the “emptiest airport in Southern Asia”, referring to MRIA, adds another dimension to the controversy. While no current specifics are available on India›s interest in the Hingurakgoda International Airport, such prospects highlight regional interest in Sri Lanka›s aviation infrastructure. The involvement of countries like India and China in developing Sri Lanka›s strategic assets could shift the balance of power in the Indian Ocean region.

The need for comprehensive planning

In conclusion, upgrading the Hingurakgoda Airport is not just a question of infrastructure development but a decision that requires comprehensive planning and a deep understanding of its broader implications. It calls for a balanced approach that aligns with Sri Lanka’s transportation enhancement goals while carefully managing its economic, strategic, and geopolitical interests.

The development of Hingurakgoda International Airport aligns with the country’s objectives to boost its logistics and transportation capabilities; the project also brings critical issues related to economic management, strategic asset control, and geopolitical considerations to the fore.

Moreover, the geopolitical implications of upgrading the airport cannot be overlooked. In a region where strategic assets influence geopolitical dynamics, Sri Lanka must carefully navigate its relationships with global powers. The decision should be aligned with the country’s broader foreign policy objectives and its role in the Indian Ocean region.

(The writer is attached to Pathfinder Foundation as a Research Associate)