Sri Lanka’s national airline has halted flights to Moscow due to insurance rates becoming prohibitive after Russia’s invasion of Ukraine, the airline announced on Monday. Sri Lanka, which suffers from its worst economic crisis since independence from Britain in 1948, listed both Russia and Ukraine among its top three tourism-generating markets. Fighting broke out in the Russian capital last month, causing Sri Lankan Airlines to reduce the frequency to two flights a week.
Because of the steep operating costs after the war broke out and difficulties in repatriating profits from Russia, the airline was forced to end the once highly profitable Moscow flights. Tourism from the two warring nations had been the country’s main source of foreign exchange to fund imports of food, fuel, and medicines. The airline cited ‘operational restrictions beyond its control’ as the reason for its withdrawal and said it will refund passengers with flight reservations.
Among the 82,300 foreign tourists who visited Sri Lanka in January, about 13,500 or 16.4% were Russians, followed by 11,750 Indians and 7,770 Ukrainians. Sri Lanka lost more than four billion dollars in tourism revenue after the leisure sector collapsed shortly after the pandemic broke out in 2020. In 2018, the country earned $4.38 billion from tourism and welcomed 2.3 million tourists.
Commercial banks have run out of dollars to finance essential imports, leaving Sri Lanka with severe shortages of food and fuel. Apparently, Sri Lanka will seek a bailout from the IMF, as its foreign currency reserves hit $2 billion at the end of February, up from $7.5 billion two years earlier.
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