Total Privatization – Only Solution For SriLankan Airlines

Total Privatization – Only Solution For SriLankan Airlines

In terms of publicity, last Sunday was a bad day for the national carrier SriLankan Airlines, its Board of Directors and the major shareholder, the state of Sri Lanka. Articles were published in all major English language Sunday publications and Colombo Telegraph. They all contained the many negative aspects of the lossmaking airline besides condemnation of the Board of Directors and CEO. Wide publicity was given to the meeting between the Chairman, Directors and CEO of the airline with the President, Prime Minister and several cabinet ministers.
The only exception was the state-owned English language Sunday publication. Chairman Ajith Dias was quoted stating “A restructuring program of our own is needed, if there is no foreign interest in this airline. We want to propose steps on how to bring the company back to profitability in two years, by consolidating the airline’s operations, shedding lossmaking routes and focusing on profitable ones.” It is pertinent to question, what was the airline doing during the last two and half years whilst waiting for PPP to happen? Was there no Plan B in case Plan A failed? Foresight and proactiveness seems to be alien to the carrier.
The Chairman has further stated, If we take the political interference out, and commit to implement this (restructuring plan) over the next two years, it will be possible to make it a profitable airline again.” His close relationship with the Prime Minister being no secret, it is difficult to understand how ‘political interference’ can be taken out when his own appointment was for the purpose of carrying out political directives, as observed in his many decisions, at times even over-ruling decisions by a majority of Board members.
Dias is being disingenuous in promising profitability in next two years. This writer, in an essay titled “Brighter or Darker skies over SriLankan Airlines’ published in Sunday Island and Colombo Telegraph last Sunday wrote of Net Operating Profit (Surplus) / Loss (Deficit) derived from the airline’s core business activity. During the two financial years under his stewardship, the airline suffered Net Operating Losses (deficit) of USD 87 million in 2015/16 and USD 111 million in 2016/17, a 26% increase, despite more favorable fuel prices from previous year. Cost of loan servicing, penalty charges for cancelled aircraft and exchange losses does not apply to calculation of Net Operating Profit / Loss in USD.
Nevertheless, abusing and mismanaging the national carrier is not the sole prerogative of the Board and a few staff as evidenced in the Weliamuna Report. The major shareholder as well as various other interest groups carry their share of blame. 
When the decision was eventually made to discontinue traditionally loss-making flights to Paris, Frankfurt and Rome, several interest groups protested, especially the travel community. Some stated, French, German and Italian tourist markets to Sri Lanka would collapse as a result.
Given below are tourist arrival figures from the said three countries, obtained from Sri Lanka Tourism Development Authority website.It is a comparison of tourist arrivals during winter months of November to April immediately before and after discontinuation of flights. Readers please note, figures from Italy are those of 2014/15 and 2016/17 as flights to Italy were discontinued in March or April 2016 whereas Paris and Frankfurt flights were discontinued in October 2016. Rather than collapsing, all markets have shown a positive growth, a clear indication other carriers have filled the void created by the national carrier’s withdrawal.  Had flights continued, losses in 2016/17 would have been greater. It is a win win situation with the national carrier reducing losses and the country not losing tourist markets from France, Germany and Italy. Had the withdrawal been implemented shortly after the unity government took office, losses too could have been reduced earlier.
It is understood, Minister for Public Enterprises Development, line minister for SriLankan Airlines had taken exception to the carrier’s failure to keep his ministry informed of the agreement signed by SriLankan Airlines on October 4, 2016 to terminate the purchase agreement for three Airbus A350-900 aircraft. However, in view of the decision taken by Committee on Economic Management (CCEM) chaired by Prime Minister Wickremesinghe on September 28, 2016 to cancel the three aircraft (one had been cancelled previously with a penalty charge of USD 17 million) and related correspondence between Prime Minister’s office and the airline being copied to the line ministry, the line minister cannot claim being kept in the dark. His broadside of being “kept in the dark” is of extreme pettiness. If feeling aggrieved, he should rightfully take up the issue with his Prime Minister, the head of CCEM for communicating directly with an institution under his ministry.

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