By Sanjay Dasgupta
Emirates Airlines has announced that it will not renew its management contract with Sri Lanka's national carrier after March this year.
Together the two airlines are major carriers to Sri Lanka
Emirates owns a 43% stake in Sri Lankan Airlines and runs it under an agreement with the Sri Lankan government.
The pull-out announcement follows a row over ticketing between the chief executive of Sri Lankan Airlines and the Sri Lankan government in December.
Relations between the two soured significantly following the incident.
Peter Hill was appointed chief executive of Sri Lankan Airlines by Emirates to run Sri Lanka's national carrier.
He refused a request from the Sri Lankan President, Mahinda Rajapaksa, for 35 tickets on a flight from London to Colombo.
The president needed to travel at short notice with 35 other passengers
The president, who was in London for a private visit, was rushing home in order to be able to attend a crucial session of Parliament.
But Mr Hill refused the request as the flight was over-booked. Shortly afterwards, Mr Hill's working visa and residence permit were withdrawn by the Sri Lankan authorities.
Talking to the BBC, Mr Hill said the incident "had some bearing" on Emirates' decision not to renew its contract.
"Basically the flights had been full for several months and we weren't able to accommodate that number of people - we were talking about 35 seats here.
"And so we asked them if there was a possibility that only the president and his close relatives could travel, and we probably would have been able to accommodate them with three or four seats.
"But obviously we weren't able or prepared to offload 35 previously booked customers, basically taking the whole of our premium cabin and 17 seats in economy, at that short notice.
"That's not the way that commercial airlines run their businesses, and we're a commercial airline."
Mr Hill said soon afterwards his work permit and the residents permit were withdrawn.
The original contract between Emirates and Sri Lankan Airlines had been in operation for 10 years, and would have come up for renewal in April.
Mr Hill said Emirates had made a set of proposals for renewing the contract more than 18 months ago, but had heard nothing from the Sri Lankan authorities.
While Emirates and Sri Lankan Airlines insist their parting has been amicable, Mr Hill said that it would nevertheless send the wrong signal to international investors.
"Personally I feel that after 10 years of putting the airline on the right road to success and profitability, it was a disappointing end," he said.
"But the message it sends out to the international community, I think, is not a good one."
For its part Sri Lankan Airlines says it will have to put together a plan to continue running its operations from April, which it says it is capable of doing.