Air Lanka was set up by the Government of Sri Lanka in 1979 following the closure of Air Ceylon in 1978. During the 1980s, the airline increased the number of destinations served and made additions to its fleet.
Air Lanka, which was state-owned, was part-privatized to the Dubai-based Emirates Group in 1998. The Government retained a majority stake in the airline, but gave full control to Emirates for investment and management decisions. In 1998, the Air Lanka rebranded to SriLankan Airlines.