The national car rier, SriLankan Airlines and the state-run budget carrier Mihin Lanka saw their losses widening during the year 2012, the recently released Central Bank annual report showed.

SriLankan Airlines reported an operating loss of Rs.20.5 billion during the year against Rs.19.1 billion operating loss it incurred in 2011.

Despite the total revenue of the airline increasing by 36.1 percent to Rs.107.4 billion, the operating expenditure rose 30.6 percent to Rs.128 billion during the year. “Emerging competition from other international airlines and the volatility of fuel prices have adversely affected the profitability of SLA (SriLankan Airlines),” the annual report noted. During the year, SriLankan Airlines acquired a brand new Airbus A320 aircraft and an A330 aircraft while successfully completing the business class refurbishment programme on two aircrafts.

During 2012, SriLankan Airlines’ domestic operation, the SriLankan Air Taxi increased its number of destinations from 13 to 15 during the year.

“With the growth in per capita income, it is expected that the demand for leisure will help fuel the demand for domestic air travel,” the Central Bank said.

However, aviation sector sources said the air taxi services of SriLankan will soon be entering into a working relationship with Cinnamon Air, a unit of blue chip, John Keells Holdings.

Meanwhile, Mihin Lanka’s losses doubled with the budget carrier incurring an operating loss of Rs.1 billion in 2012, against Rs.455.3 million in 2011.