Daily Mirror: Srilanka: Saturday, July 15, 2017.
The first Sri
Lankan flag carrier Air Ceylon [1947-1979] terminated its operations to pave
way for Air Lanka [1979-98]. Following its partial acquirement by Emirates in
1998, it was re-branded SriLankan Airlines. From 1998 it was dressed in the
current livery. The Dubai-based Emirates Group invested in local flag carrier
under an agreement signed by the Chandrika B Kumaranatunga government for a
ten-year strategic joint venture.They initially invested US $ 70 million for a
40% stake, which later increased to 43.6%. The ground handling and airline
catering at Colombo-Bandaranaike airport became the exclusive right of Emirates
along with full control for investment and management decisions for a ten-year
period. Refurbishing the airline’s image and fleet was another important task
for Emirates under the agreement. However, this partnership ended abruptly due
to political maneuvering by the Rajapaksa regime. However it has sustained its
re-branded name and logo.
Burdened
Tax Payer
The airline
started plummeting for a nosedive after former President Mahinda Rajapaksa
ended the management deal with Emirates. Treasury data reveals a loss 50
billion in the tenure of the new unity administration. In simple terms, the
airline went down from earning a profit of Rs 12 million a day under Emirates
in 2008 to a loss of whopping 80 million a day in 2017. The Government of Sri
Lanka in a deal that was finalized in 2010 bought Emirates 43.63% stake in the
airline, thus ending any connections the two international airlines had with
each other.
Failing to
find a private stake-holder for the National carrier during its two years in
office, the UNP-SLFP government altruistically contributed to the National
carrier’s accumulated losses brings it to a staggering 170 billion rupees as at
end April 2017.
In simple
terms, the airline went down from earning a profit of Rs 12 million a day under
Emirates in 2008 to a loss of whopping 80 million a day in 2017
In 2008,
Peter Hill, the Emirates-appointed Chief Executive Officer declined to
accommodate President Rajapaksa’s family and his coterie returning home on a
fully booked flight from London. Obliging the ex-president would have meant
removing paid passengers and allowing their seats to the party. Rajapakse
abrogated the Chandrika-Emirates agreement and removed CEO Peter Hill, who had
over 30 years of experience in the Airline industry. Hill, during his initial
stages, gained experience with British Airways and Gulf Air, before playing a
major role in developing Dubai-based Emirates to its present position. During
his tenure, the airline survived a major pre-dawn attack by LTTE on July 24,
2001, where at least 19 people died, two Airbus A330 planes, one each of A320
and A340, and two other planes along with a number of military planes were
destroyed.
Wickremesinghe
lacked the experience or formal learning that would qualify him to run an
airline
MR later
appointed planter Nishantha Wickremasinghe as the airline’s Chairman.
Wickremesinghe lacked the experience or formal learning that would qualify him
to run an airline. The accumulated profits during Emirate-managed Sri Lankan
were 9.2 billion. The loss for the seven years under first lady Shiranthi’s
brother from 2008 to end of regime was Rs. 128 billion. A Board of Inquiry investigation into
corruption at SriLankan under the chairmanship of Wickramasinghe released a
report in March 2015. The report stated that corruption was widespread and
established the allegations of CEO Wickramasinghe’s ‘affairs’. It also
discovered an instance of a female crew member being released to allegedly work
at ‘Temple Trees’ who admitted that she had worked at Namal Rajapaksa’s office.
She was drawing a fuel re-imbursement of Rs. 75,000 a month submitting bogus
petrol bills that totalled to Rs. 2.8 million [in addition to salary and
perks]. A flight to Paris was supposed to wait for a group of 80 tourists going
to Paris.They were to arrive from Maldives. An “influential” female member
telephoned her boss complaining about the long wait. The flight was commanded
to take off for Paris immediately without the inbound passengers. The 80
passengers from Male had to be rerouted on other flights causing a massive loss
to Sri Lankan Airlines.
We are losing
in spite of low oil prices, when most international airlines are doing well.
Claiming compensation by AerCap, the victimized leasing firm on premature
termination of lease on A350 aircraft which the last regime ordered, has
contributed to the losses in 2016. All state enterprises burden the people with
corruption, mis-management, and bad appointments. Currently the airline
industry has grown to be highly competitive with private airline’s innovative
management skills overriding state run entities.
Successive
governments appointed Boards on the basis of loyalty to political leaders, to
their families, and schoolmates ignoring the significance of relevant expertise
or competence and merit in corporate supremacy
RTI
Application
In a high
profile application for the Right to Information, last week, the Pilots Guild
of Sri Lankan Airlines used the provisions of the RTI Act and requested details
of salaries and perks to top administrators at SriLankan, which is about to
crash land being unable to face huge losses. Creating history, The Guild has
sought clarification on the payments made to the Chief Executive Officer, the
Textile Technologist; Director Human Resources and the Chief Commercial
Officer. They also seek information on the short-lived deal SriLankan had with
Pakistan International Airline, the termination of order for Airbus A350s and
Airbus A320 jet conversion. Since inception, all transactions of SriLankan
Airlines were dealt with in secrecy. The Maithri-Ranil Unity Government is
seeking a partner to revive the ‘sick giant’. Apart from the Pilots Guild, RTI
law, a great step forward by the government, has provided an opportunity to the
members of public a right to know about these covertly carried out
exploitations.
Who is
Responsible?
Successive
governments appointed Boards on the basis of loyalty to political leaders, to
their families, and schoolmates ignoring the significance of relevant expertise
or competence and merit in corporate supremacy. President Jayewardene appointed
Rakitha Wikramanayake as CEO in 1978. Wickremanayake, an expert in the flying
industry, was appointed along with few other qualified high caliber members to
run the show. JR refrained from interfering in any manner in its affairs. A
Presidential Commission was appointed in 1986 by him to inquire into affairs of
the airline. The commission reported on a few irregularities including
financial mismanagement. After JRJ retired in 1988, the National carrier
experienced a jet lagnever to recover. The findings of the commissiongreatly
benefited the national carrier. A change in high command was effected. In this
instant a senior SLAS with few other quality men that included DS Jayasundera,
the multitalented dynamic industrialist, who was in the vanguard of Hayleys
group’s growth were recruited. The airline prospered as an independent body
causing no burden to the treasury.
In the latter
part of 1988, a change of Head of State saw a re-structuring of the Board. The
newly elected Executive President, R Premadasa dissolved the board of directors
for no valid reason and replaced it with handpicked ‘flying without wings’
variety. His son-in-law, a horticulturist, too sat on the new board.
SriLankan
flew through many political tornados experiencing bumpy rides. The airline
incurred losses before and after Emirates and ended with a cumulative loss in
excess of Rs 190 billion. It’s not only the Rajapaksas who contributed to the
destruction of the national carrier. The Executive Presidents who preceded and
Prime Ministers who succeeded him too planted family members, cronies and
schoolmates to the ‘cockpit’ [excluding
JRJ and CBK]. All of them added to the disaster that commenced in the 1970s.
The successive administrations that stifled the airline created artificial
sonic booms and debt traps which caused the carrier to crash land and should be
answerable to the tax payer.
What Next?
The main
worry now is converting the carrier to an economically viable stable entity, if
not a valuably running undertaking. The government’s objective to bring in a
foreign partner and restructure SriLankan will be assessed on priority basis.
However, disposal of assets including the aircraft; and use proceeds to settle
part of debts and compensate the employees is another alternative. Legislation
has to be enacted to confiscate assets of those responsible for the ruin to
cover part of losses incurred. They need strength to grapple with impending
turbulences the Big bird would experience. Decisions need to be taken by good
governance. Unwrap the oxygen masks and prepare for a coarse bumpy touchdown.
SriLankan is
the only airline in the world where a Textile technologist who knows nothing
about running an airline was made the Chairman of an Airline Company. Promises
of good governance made to get the votes go unaccounted. These positions should
be properly advertised at international level and quality men should be
employed. These appointees require a global approach to business and have a
broader vision. It’s the tax payers who have invested in these undertakings.
Establishments like SriLankan mustn’t be treated like the birthright of corrupt
politicians to find employment for their acquaintance and relatives.
‘If happy
little birds fly beyond the rainbow, why oh why can’t I?’ -- Yip Harburg