Salvaging SriLankan Airlines
Lately, SriLankan Airlines (SriLankan) has been making the headlines for all the wrong reasons. Even though it is a national symbol, SriLankan has been plagued with threats such as political interference, excessive debt, staff issues, corruption and many other operational and management issues. The bottom line is that the airline has accumulated a monumental loss of Rs.100,000 million (about US$700 million) over the last seven years and its last profitable year was 2008 under the management of Emirates. Unarguably, this is a huge burden on the nation.
The International Air Transport Association (IATA) has reported a fifth consecutive year of improving profits in the airline industry. On the contrary, even after the civil war, since 2008 SriLankan hasn’t had a single year of profit despite improving passenger traffic during this time.
The main reason behind the present dire situation of the airline is that it has not been able to carry out its operations freely and independently. Over the years it has been abused by politicians and government officials over and over again as if it’s their personal property. For instance, high powered government officials have abused their power by delaying flights to accommodate their unpunctuality, attempting to bump passengers off flights to accommodate their entourage and even diverting flights to unscheduled destinations as they have pleased. Needless to say, as long as the government is controlling SriLankan and appointing puppet-like directors to the board this trend of abuse will continue. Thus, it’s crucial for the government to cut its controlling interest with the flag carrier and let it operate freely in the market. That means privatising the airline.
It should be understood that a government is elected not to run businesses but for wider social economic purposes. A privatised airline would mean it would operate efficiently: reducing costs and increasing revenue. The airline awould be disciplined by the incentive of profit. There should be minimal political interference compared with a state owned entity.
After years of consistent loss-making, SriLankan was brought to profitability under Emirates management, which was unduly suspended in 2008 to feed politicians’ egos. Soon after the suspension of the management agreement SriLankan reported losses, thus proving SriLankan can be privatised successfully and as long as the government is involved in its management that it will continue its poor performance.
Many airlines have been privatised around the world – some are a success and some are not. Of course, seeing the current trend, there is no confidence in the government that privatisation would be corruption free and executed in the nation’s best interest. However, with regard to SriLankan there seems to be no option but to privatise. It is necessary to select the right partner for the privatisation and draft ironclad contracts and controlling/monitoring mechanisms to hold the private company accountable and for the privatisation to be successful.
It is natural to feel dejected to see a privatised entity doing so well under private management. Probably, this is also a motive behind the undue suspension of the management contract with Emirates in 2008. However, it should be borne in mind at all times that if the government is not capable of managing the airline profitably, it is for a greater good as it would contribute to the economy in terms of employment, taxes etc., and lessening the burden on the government.
It is time that the nation swallows its pride and emotionally detaches from the national flag carrier and gets used to a Sri Lanka without SriLankan Airlines.