Saturday, April 2, 2016

Reviving SriLankan

There is no magic wand for anybody to wave to restore SriLankan Airlines to health and profitability. What has been said in Parliament by Deputy Minister Eran Wickremaratne and published elsewhere recently, supplemented in this issue by what a regular contributor who once worked for the national carrier says today, complements the horror story. Everybody knows that the losses are mind-bogglingly tremendous and rising by the day. Nothing very much appears to have been done about the Weliamuna report, a tip of an iceberg no doubt written in haste at the request of a new government wanting to get its teeth into its predecessor, even though it was in some months ago. Meanwhile the airline is hemorrhaging with no serious effort made to stem the bleeding and the tax rupees of the people, including that of the poor, continues to be poured into a bottomless pit.

We run a story today that UL – the two letters that precede all SriLankan flight numbers, is seeking foreign assistance to get out of what it undoubtedly a king sized mess. 

During President Chandrika Kumaratunga’s tenure, the airline entered into an equity sharing arrangement with Emirates with the Sri Lanka government holding control of our airline and giving the foreign partner the management. But that was flushed down the toilet with President Mahinda Rajapaksa taking offence at UL’s then chief executive officer, Emirates appointed Peter Hill, not agreeing to bounce paying passengers holding confirmed seats to accommodate his retinue returning home from a foreign jaunt. That petty reaction resulted in the Emirates shares being repurchased by the government and what were then a profitable operation being turned on its head.

It would be foolish to say that chucking out Emirates is the full story of SriLankan’s present woes. There were many other factors too that came into play, notably the phenomenal rise in the prices of aircraft fuel. But there was also poor management, corruption and lots else highlighted in the Weliamuna report. Nevertheless, a partnership that had till then paid this country was ended for rank bad reasons. Seats on the boards of directors of not only SriLankan Airlines, but its predecessors Air Lanka and Air Ceylon, have been greedily sought by cronies of whoever comes to power. The main attraction was the free flights granted to the directors of the company and their families. This is a continuing story and all kinds of people with little to offer have been appointed directors of UL. A few rare souls, virtually arm twisted to accept appointment because of their expertise, did not take free tickets and paid their own way when they needed to fly. But these can be counted on the fingers of one hand. President Rajapaksa appointed his brother-in-law, a planter by profession, probably because he could not or did not want to say ‘No’. It is not necessary to labor on the doings of that worthy now under investigation.

But it will be a good thing if the present government, at least now, dispense with the free flight perk bestowed on directors of the airline and their families so that fewer vultures will descend on UL in the future. Getting a few free flights for themselves and theirs by virtue of a board seat can be the objectives of minnows. But there are also rapacious whales with their eyes on aircraft purchases and other mega deals readily available in the global airline industry out in the water. Some Airlanka directors on a board chaired by senior civil servant Lakshman de Mel on which respected business leader Lal Jayasundera also sat once went for their first board meeting in Bangkok of Airlanka Catering Services (ALCS) in which Thai International was the equity partner. They found cash-stuffed envelopes on the board table in front of their seats. Asked what these were, they were told that this was the ‘pocket money’ routinely given to their predecessors at board meetings held in Bangkok. The Thais had been told to credit any santhosams on offer to UL representatives of the ALCS board to UL’s account.

Privatization has become a dirty word in Sri Lanka today. But some kind of foreign assistance seems necessary to pull Sri Lankan out of the present morass. International Trade Minister Sujeeva Senasinghe told reporters in Colombo last week that the government was seeking some such assistance after the country had been made privy to the extent of the airline’s accumulated losses (Rs. 128 billion or USD 872 million) and its massive debts. The minister indicated that the government was looking at restructuring the airline either with direct foreign capital or a management agreement with a foreign airline and he hoped that the process would be completed in the next two or three months. It is unfortunate that available negotiating skills in this country are nowhere near desired. There are also questions of integrity. We can never be sure if somebody is batting for the country or for himself. Any foreign partner coming in will be looking at profitability and the best deal for themselves. Many are not above ‘looking after’ those who help them. They are not in business for reasons of philanthropy.

Mihin Air which should never have been floated is now on SriLankan’s back. Getting some return out of Mattala is a gargantuan task. People not only want to be directors of the company owning the national carrier; they also hanker for jobs there and there have been some recent figures of staff overloads indicative of total management capitulation to political demands. There is no doubt that the floating of Airlanka by the J.R. Jayewardene government with the assistance of Singapore Airlines gave Sri Lanka a modern airline that has served this country well. After the riots of July 1983 that blackened Sri Lanka’s image in the world outside and several airlines stopped flying to Colombo, the tourism industry on which the country had invested so much and banked so heavily would surely have suffered more grievously if their was no Airlanka to bring the little traffic we were able to generate. The airline also made many Lankans, be they cabin crew, engineering staff or ticketing agents, more employable in the global airline industry by imparting needed skills.

There are advantages that UL can offer foreign partners, Air Services Agreements the country has with other nations being one of them. That was why more than one foreign airline, starting with KLM in the early years of Air Ceylon, had been interested in partnering our national carrier. Let us trade what advantages we have in our best interest, take the hard decisions we must in effecting needed economies and cutting our losses, and quickly do what we must to return UL to good health. If the present board is divided into two factions as alleged by the writer of today’s article, get rid of the lot; and it might be a good idea to stop upgrades to business class of passengers paying economy class fares no matter who’s who they are.

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