"Our new 10-year plan hopes to increase revenues by between 10-15 per cent annually," Andrew Gray, chief executive officer of Air Lanka, told Reuters in an interview.

"We are looking to increase traffic by some eight per cent annually and for our yields to grow by around 2-3 per cent," he added.

"We also want to double our carriage within the next 10 years by shifting into hub transfer traffic using Sri Lanka's geographic location to get into other traffic cross-flows," Gray said.

He said Air Lanka had seen stagnating profits over the past five years despite a boom in the global airline industry.

"Although we have a 70-per cent load factor, our yields are low," he said.

Gray said Air Lanka planned to open a new route to Australia from Europe and the Middle East.

"We are also planning to fly via Dubai in conjunction with Emirates,with full traffic rights," he said.

Dubai's Emirates airlines bought a 40-per cent stake and management rights in Air Lanka earlier this year as part of Sri Lanka's privatisation drive.

Gray also said Sri Lanka's protracted ethnic war against Tamil Tiger rebels was curtailing Air Lanka's growth.

"There is a big gap between inbound and outbound traffic, with some 75 per cent of Air Lanka's revenues coming from overseas," he said.

Gray said Air Lanka would utilise its increased revenues to fund a $20-million investment programme, which included upgrading its three Airbus A340 airliners and becoming millennium compliant.

"We will see a 30-per cent increase in capacity and a scrapping of the first-class to a new superior business class once the new fleet arrives," Gray said.

"Our first-class market is very small and we are finding that businesses are also reducing their first-class travel," he added.

Air Lanka has ordered six A330-200 planes from Airbus Industrie for delivery beginning in October1999 to replace its four ageing TriStars.

Air Lanka is also expected to gradually dispose of its two Airbus A320 airliners, company officials have said.

Gray said the maintenance of the four TriStars was a heavy burden on Air Lanka.

"Converting the TriStars into freighters is going to cost too much. Yet it is not easy to shift the TriStars because everyone (airlines) is trying to unload them," Gray said.

Gray said Air Lanka hoped to sell the four aircraft, even without profit, to charter operators.

He said that the airline would also hike its fares according to its new product specification, but only later.

"Fares will have to match prices," he said.