Mattala Airport losses have reached an astounding Rs.39.3 billion over six years, highlighting the airport’s severe underutilisation. The Sri Lankan government is now pivoting to a new public-private partnership model to stabilise operations and reduce financial strain.
Mattala Airport losses prompt Sri Lanka to explore new PPP model for sustainable operations
Mattala Rajapaksa International Airport (MRIA) has long been the subject of scrutiny due to its underperformance and heavy financial burden. Recent audits reveal that the airport has accumulated Rs.39.3 billion in losses over the past six years, underscoring the urgent need for a sustainable operational strategy. The government’s latest approach involves replacing a previously planned India-Russia joint venture management arrangement with a fresh public-private partnership (PPP) framework.
According to the 2024 annual report of Airport and Aviation Services (Sri Lanka) (Private) Limited, MRIA’s operating loss for the year reached Rs.3.36 billion. The facility generated only Rs.242.2 million in operating revenue, while costs soared to Rs.3.6 billion, leaving expenditure nearly fifteen times higher than income.
The Auditor General’s report further highlighted that despite a total capital injection of over Rs.36.5 billion for construction, the airport has fallen far short of projected passenger targets. Initially designed to handle one million passengers per year, MRIA has welcomed only 321,577 passengers cumulatively over the last six years. The deficit is compounded by annual interest payments of approximately Rs.2.05 billion on foreign loans, even as external debt servicing remains suspended.
In response to these alarming figures, the Sri Lankan government is implementing a strategic pivot. In December 2025, the Ports and Civil Aviation Ministry announced plans to invite Expressions of Interest for private sector management of select commercial activities at MRIA. The PPP model will allow private investors to operate cargo handling, aircraft maintenance, retail, and hospitality, while core aviation functions such as air traffic control and security remain under state control. This move effectively cancels the previous plan to hand management over to a consortium of India’s Shaurya Aeronautics and Russia’s Airports of Regions Management Company.
Despite the financial losses, MRIA has seen intermittent activity, particularly during the 2025/2026 winter season. Russian carrier Red Wings Airlines initiated six weekly flights in late 2025, while Belarus’ national carrier Belavia has operated weekly services since October. Additionally, Ukraine’s SkyUp Airlines was scheduled to launch charter operations in December 2025. These seasonal operations, however, are yet to establish a consistent revenue stream capable of offsetting the airport’s massive operational overheads.
Legacy infrastructure challenges persist as well. A security building complex, which began construction in 2013 with an initial investment of Rs.18.7 million, remained incomplete at the end of 2024—over a decade later. These unfinished projects highlight operational inefficiencies that the proposed PPP model aims to address, alongside the broader objective of reducing financial losses.
Market analysts suggest that the government’s PPP initiative represents a pragmatic approach to curbing further fiscal drain while gradually increasing private sector participation. By focusing on commercially viable areas, the model aims to enhance revenue without compromising essential aviation services. The strategic shift may also help improve investor confidence, attract international aviation partners, and boost regional tourism traffic over time.
Nevertheless, questions remain about MRIA’s long-term viability. With limited passenger volumes and historical operational inefficiencies, the airport’s ability to transform into a profitable hub will largely depend on careful execution of the PPP framework, effective management, and increased regional airline engagement. The government is expected to prioritise transparency, accountability, and measurable performance indicators in all contracts to prevent the recurrence of financial shortfalls.
In conclusion, Mattala Airport losses have been a persistent challenge for Sri Lanka, but the new PPP approach offers a pathway to stabilise operations, reduce fiscal pressures, and unlock the southern gateway’s commercial potential. Success will hinge on attracting capable private partners, completing unfinished infrastructure, and ensuring a steady flow of passengers and cargo traffic.