By Rajeewa Jayaweera –
Rajeewa Jayaweera
Colombo based national carrier of Sri Lanka, SriLankan Airlines (formerly Air Lanka) has announced an unaudited ‘Group Loss’ of LKR 8.9 billion (USD 65 million) for FY ending March 2016, a 46% decrease in losses from previous FY. It is reliably learnt, the loss from airline operations amounts to USD 120 million. During the FY, the airline acquired 5 new aircraft and retired 5 ageing aircraft. The airline is making efforts to cancel the four firm and four optional orders placed with Airbus Industries for A350 aircraft.
Dubai based national carrier of the Emirate of Dubai, Emirates Airlines, the success story of modern aviation, has announced a net profit of USD 1.94 billion for FY ending 31 March 2016, a 56.4% increase in its net profit in the previous FY. During the FY, the airline acquired 29 new aircraft and retired 9 older aircraft. Emirates hope to take delivery of 36 new aircraft and retire 26 older aircraft during the current FY.
SriLankan Airlines, having commenced operations on 01 September 1979 had a head start of six years over Emirates. Table 1 gives the two important indicators vital for any airline in its start-up phase.
Air Lanka, with a paid-up capital of USD 16.6 million in 1979 was better placed than Emirates with a paid up capital of USD 10 million in 1985.
GoSL recently announced the absorption of liabilities amounting to USD 3.2 billion belonging to SriLankan Airlines. This figure, in real terms comprises of accumulated losses of USD 1.2 billion and a contingency liability of USD 2 billion.
Emirates Group Annual Report for 2014/15 (previous year) states, “to date, Emirates and DNATA have generated dividends of AED 14.6 billion (USD 3.97 billion) for the Dubai government. Those dividends have been ploughed back into the economy, helping fund essential infrastructure projects including the various phases of expansion at Dubai International airport and Dubai World Central”.
The start-up background of both carriers reveals many similarities. A glaring dissimilarity is the appointment of a pilot by profession with no management experience as the first Chairman/ Managing Director of Air Lanka who also functioned as CEO compared to the aviation management professional with a proven track record appointed by Emirates to oversee the airline. He carried the title of Group Managing Director.
Air Lanka / SriLankan Airlines
The brain child of then Head of State President JR Jayewardene, Air Lanka was formed as a fully state owned GCEC company. Prime Minister Lee Kuan Yew of Singapore, based on a request made by President Jayewardene agreed to provide assistance and expertise from Singapore Airlines. The airline started operations with two Boeing 707 aircraft leased from Singapore Airlines. Air Lanka took to the skies on 01 September 1979. Its initial destinations during first year of operations were Bangkok, Singapore, Madras, Bombay, Dubai, Abu Dhabi, London, Frankfurt, Paris, Trichy and Trivandrum. The airline came under the direct purview of the Head of State. Its first Chairman / Managing Director Capt. Rakitha Wickramanayake, was assisted by a General Manager, a senior Singapore Airlines staffer sent on secondment.
Emirates Airlines
The brain child of then Minister of Defence HH General Sheikh Mohammad bin Rashid Al Maktoum, Minister of Defence, UAE and member of ruling family of Dubai, he had formed DNATA with four other staff in 1959. In 1985, he co-opted Maurice Flanagan, who had joined DNATA as Director/General Manager in 1978 and nine others to prepare a Business Plan for the formation of an airline. Armed with an approved Business Plan, a grant of USD 10 million and a gift of two leased Boeing 727 aircraft obtained from PIA by the Ruler of Dubai, the airline took to the skies on 25 October 1985. Its initial destinations during first year of operations were Karachi, Delhi, Bombay, Amman, Colombo, Cairo and Dhaka. Sheikh Ahmed bin Saeed Al Maktoum, nephew of Sheikh Mohammad joined Emirates Group as its Chairman. Maurice Flanagan assumed the role of Group Managing Director. It must be noted, the Emirate of Dubai does not a have oil and is dependent on the Emirate of Abu Dhabi for its needs.
The initial passenger profiles of the two carriers can be gauged from the initial destinations of the two carriers. Whereas Air Lanka’s passenger profile in 1979/80 consisted of inbound tourists, labour traffic to Middle East and locals travelling for business and leisure, Emirates passenger profile in 1985/86 would appear to be labour traffic to and from South Asia and Egypt. It would not be incorrect to state Air Lanka was better placed to succeed than Emirates during their initial start-up phase. July 1983 riots did impact Air Lanka’s tourist segment. On the other hand, Dubai had no inbound tourists to speak of till much later.
Such being the start-up phase, it is relevant to take a quick look at current status of the two carriers which is reflected in Table 2.
Both group and carrier performance of the two in the last FY 2015/16 is reflected in Table 3.
SriLankan Airlines, in its recent Press Release refers to a 4% drop in revenue from previous FY and announced a ‘Group Loss’ of LKR 8.9 billion for FY ending March 2016. The release did not specify if 4% drop in revenue relates to Group Revenue or Airline Revenue. SriLankan Airlines has attributed its losses to “addition of capacity to the Colombo market by other airlines” (which are incidentally sanctioned by the airline’s major shareholder GoSL) “accompanied by a dramatic drop in air fares in certain markets and depreciation of exchange rates”.
Emirates Airlines, despite a drop in revenue of 4.3% from previous FY have declared a profit of USD 1.94 billion for FY ending March 2016. The reduction in revenue has been attributed to “the strengthening of the US Dollar against many currencies and downward pressure on prices caused by sharply reduced fuel prices”.
Whereas both SriLankan Airlines and Emirates have reported a drop in revenue of 4% and 4.3% respectively due to competition and strengthening of US Dollar, the former has incurred an unaudited loss of USD 120 million whereas the latter has declared an audited profit of USD 1.94 billion.
SriLankan Airlines’, in 2015/16 has managed to reduce fuel costs by USD 160 million compared to previous FY due to the reduction in oil prices as indicated in Table 4.
It must be highlighted SriLankan Airlines’ loss of USD 120 is despite a saving of USD 160 million in fuel costs and other cost saving measures introduced by the management. Competition and a strong US Dollar are global factors and faced by all airlines.
It is pertinent to examine reasons for one group to incur a carried forward loss of USD 3.2 billion over 37 years and the other group to declare dividends amounting to USD 3.97 billion over 30 years.
Various factors such as a 26 year civil war in Sri Lanka, coping with Trade Unions etc. not faced by Emirates need be factored in. However, two vital factors surpass all others.
Air Lanka / SriLankan Airlines has had to contend with a majority shareholder in the form of the state who insist on being involved in all major and most minor decisions of the airline. Decisions are more often than not based on political rather than commercial considerations.
At Emirates, there are no reported instances of interference by the Ruler or decisions based on non-commercial considerations. It was administered by its Group Managing Director till a few years ago and since, by the President of the airline, both aviation specialists and expatriates.
Criterion for appointment of Chairmen and Directors to the board of SriLankan Airlines by the majority shareholder, since January 1989, has been based on personal relationships, friendships, school ties and as a form of rewarding political loyalists. Expertise in specific fields, experience in corporate governance and what they could contribute to the airline is not the criterion. Even the few Directors with requisite expertise appointed by the majority shareholder from the country’s blue chip companies prefer to take a back seat and flow with the tide for fear of the companies they represent being penalized by the majority shareholder for not doing its bidding. The 13 to 15 Chairmen appointed during the airline’s 37 years consisting of an Airline Pilot, Civil Servants, a Retired General, Chairmen of Blue Chip companies, a Secretary to the Head of State, a Lawyer, a Secretary to the Treasury, a Planter and finally an owner of an Apparel Exporting company has contributed little other than carry out instructions from the majority shareholder. It has also had 5 CEOs including the incumbent, the first two being expatriates and remaining three locals.
Emirates have had a very stable management structure with Sheikh Ahmed continuously serving as Chairman since the inception in 1985 to date. Besides being President of Dubai Civil Aviation Authority, his portfolio of positions includes Chairman/CEO of Emirates Airlines & Group including DNATA, Chairman Dubai Airports, and Flydubai, and the Chairmanship of 16 other companies. It therefore can be safely assumed he delegates the management of each of the companies to the respective Managing Directors / Presidents, limiting his involvement to macro affairs. He is never seen attending Trade Fairs in Europe or Agent’s Awards Functions. Maurice Flanagan remained at the helm till he passed away in 2015. He was succeeded by Tim Clark, designated as President of the airline. Clark joined Emirates in 1985 as its first Commercial Director.
Unlike the Ruler of Dubai, GoSL is incapable of appointing competent and dedicated professionals as directors and leave them unhindered to manage the airline. Recent statements by current leaders of a Public Private Partnership indicate yet another ruse for the majority shareholder to retain control. It may be recalled when Emirates, despite having a 43% equity share and management control of the airline could do nothing when the work visa of the CEO appointed by them was revoked and made to leave the country for not permitting the majority shareholder to have its way.
It is in this background that this writer argues in favour of the need for the majority shareholder to step down and assume the role of a minority shareholder where by the majority in the board will represent interests of private investors. Their priority will be to protect and enhance their investment and not local politics, tender bending, family-bandysm or cronyism. The benefits garnered by such a policy can be observed in the phenomenal growth and profits earned by Emirates Airlines during its 31 years of operations and contribution of USD 3.97 billion by the Emirates Group to the Dubai economy.
Anura / May 22, 2016
If the politician wouldn’t pork their fingers, and let it run it’s course as a pure business venture with the sole purpose of earning income for the country and people, that would do well and prosper, else it’s doomed, in that process poor people’s money too go down the drains.
Lately, Malaysian Airlines was making losses and in trouble, the government took hard and prompt action to avert the crisis. When the government tabled the restructuring and revitalizing bill in the parliament both government side and the opposition unanimously passed it.
They brought in a German national who had experience in turning around loss making airlines such as Irish Air to head it, and turn it around.
As per the bill passed in the parliament, the day the restructuring plan started the old airline was dissolved, and new company took over the assets of the old company. Out of the 16,000 employees, only 12,000 was taken into the new company as fresh employees, and the rest were sent home with benefits. Also they are sell lot aircraft to save cost.
Routes to the west given to Emirates on code hare basis with only daily
A380 flights to London by Malaysian Airlines. Flights to east operated by Malaysian Airlines code share with Emirates. In business world during hard times, extra-ordinary things happen, so it’s win, win for both.
The new head says they have very archaic systems, according to him, one is the airlines is getting supplies from over 1000 vendors, he wants to bring it down
less than ten that would give huge cost savings.
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Anura / May 22, 2016
It’s really insane to run an Airline when it’s not making profit many years in row, for that matter any business. Good to sell it and get out of it to save the millions of the poor people’s money for all the wasted money was collected by taxing the people, and all that would have been put to better use.
So called Airline of Hong Hong – Cathy Pacific – is not owned by Hong Hong government but by a private company – Swire Group – owner’s of which are a British family called Swire Family, they also own the Finalys in Sri Lanka. This was started during the British time, after hand over of Hong Kong to the Chinese, they too maintaining the same status core.
Best, option to approach Sir. Richard Branson of Virgin Group for he has Airlines both in Europe and Australia. This going to be a perfect fit for his group to fill up the gap.
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Jagath Fernando / May 22, 2016
Sri Lankan has been a “toy for boys” for many years irrespective of govt in power. Yahapalanaya govt did no better when the board members were appointed. MARA went to extremes by appointing his BIL and allowing him to use the resources and staff for all his needs.
It is abundantly clear that govts cannot run commercial enterprises and yahapalanaya govt is no different. Unfortunately you need the guts and balls to make decisions in the interest of the nation.
Sri Lankan should have been given to private sector management 12-15 months ago and we would have saved atleast Rs 10 billion. Current losses are Rs 1 billion per month for Sri Lankan when oil is at USD 40 per barrel. Airbus order is 7 A 330s and 8 A 350s of which I understand that 4 A 350 s have been cancelled. God only knows as to how we are going to pay for the rest of the aircraft.
The only attraction for a foreign airline is the access we have to India and some slots we have in European airports. Our passenger business have been running at a loss for many years and hence nothing much to offer. Our load factors and yields are below par.
It is unlikely that GOSL will bundle maintenance and ground handling and catering together with the airline to be offered to a foreign party. We have to clean up the balance sheet for any JV partner to be interested and hence massive amounts of debt and losses have to be picked up by the tax payers. That is Rs 400 billion + in debt without the new aircrafts debt and another Rs 100-200 billion in losses brought forward.
Rajeewa has correctly pointed out that staff has to be pruned down to manageable levels and some of the perks cut and this is unavoidable. Pilot salaries at Rs 2-3 million and stewardesses at Rs 500,000 per month is not possible. Ranil has to be bold in the interest of the nation and not burden the poor any further.
Infact when World Bank and City Bank assisted the GOSL in 2005 in finding a partner, there were no takers even after contacting 100+ airlines!! So it is unlikely that it will be any different this time around. Emirates came in later on and we agreed to most of their terms since we had no choice,
Hope by the end of the year our national carrier will not be a burden on the tax payers !!!
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Kugan / May 22, 2016
Anura
It’s very revealing stories but ground reality is different in our home land.the top has to be clean and bold then the followers can step in that direction.
Look at the mess in parliament in the firstplace.the head is isolated PM is cooling mood nothing serious apart for getting approval for blood proof motor official opposition is in way off the reality so called joint opp in brawl jvp in mayhem don’t know where to start SLMC is quiet after all no one to trust.
Since JR changed or brought this
executive presidency system it’s open the gate for what we can see now.
We have seen how maharaja gone wild.it’s not him that’s how the system works.
God save mother lanka.I used to say bless
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shevan / May 22, 2016
Rajeewa,
For any other nation who may be faced with a similar situation like UL what you have written may make some sense in deciding how to go forward.Yet for Sri Lanka and its politicians it would not ,and I am sure we would continue to have the pleasure of reading your Articles on the subject in many years to come as well.
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cholan / May 22, 2016
He He He the new Boss came from Air Linges to reorganized the Malaysian airlines has resigned,,,couldn’t stand with working with racist…lazy Malay administration …
Malaysian is also like cursed SL to show racism against minorities there in jobs..education even in sports.
There was a time MAS was managed by a Tamil guy …with profits and fame.
Mahathir Mohamed the Indian Tamil Muslim during his 22 years rule has handed MAS to his crony Malay guys and the downgrade started to day in pathetic state ..when AIR ASIA run by Indian origin guy is growing fast .
Since Air Lanka times there are top Tamils staff working..and gained excellent experience but they can’t become GM or Chairman ( but a grade 8 educated planter can) in this cursed SL…top jobs are being reserved only for Sinhala Buddhists.
The success of Emirates and DNATA is all top positions are with foreigners and UAE ruler listen them and gave free hand to manage the Airline and Airports.Also to day DNATA manage airports in Asia ,Africa and Europe.
The current administration will nail the coffin of SR LANKAN airline soon.
Cheers
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paul / May 22, 2016
Ah Colon, if only Tamils ruled the World, what a happy place it would be! I’m sure that even God is a Tamil (Vellahla of course).
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Native Vedda / May 22, 2016
paul
“Ah Colon, if only Tamils ruled the World, what a happy place it would be!”
Yes you maybe right, the evidence is out there all of us to see.
Look Tamils how happy they are in Tamil Nadu where not only they worship the matinee idols but they also elect them to Legislatures and then worship them.
The Tamils (being early converts to Jainism) also believe in the idea of “Pain” being a liberating force.
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choan / May 23, 2016
Shame
Sinhala Buddhists can’t even manage an airline
But big talk
He He He
Singapore Airlines was managed by Tamils from the inception and todays one of the top airline in the world …
He He He Rakitha Wickramanayake landed Air Ceylon in Bangkok ( Air Ceylon was compelled to sent a pilot from Colobo to bring the flight back ) and sent his resignation by telex and joined SIA….such a guy got a Chairman job simply he is related to big nose JR?
BTW what is Rakita s qualifications?
looking at what is happening today in North-East certainly Tamils are good administrators before 2009, even young girls were able to walk alone during night then …is this possible today ?
Cheers
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Spring Koha / May 22, 2016
Mr Jayaweera, this is a very wicked act.
You have chosen to compare an outstanding global operation to a local charity that is run for the benefit of those in our several successive governments who have not only treated our flag-carrier as ‘their fiefdom’ but have from time to time elevated it to their private ‘whore-dom’.
Woe! Woe! and thrice Woe!
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old codger / May 22, 2016
When Rajeewa writes about Airlines, he is on the dot, unlike when he talks about things like Victory day. I agree with his airline views absolutely. We must immediately down size Sri Lankan and sell it off . The state should not have even 5%. Why do we need a “National” airline anyway? I have not seen anyone coming up with a logical reason to have one. I am sure most of the staff can go work for foreign airlines and actually earn money for the country.
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bandara / May 22, 2016
Your anger is due to your failure in getting back into UL? You worked for the same airline and then joined Qatar Airlines and then kicked out. You are a failure but you are trying to teach the rest. You better go back to your travel agency and find some job
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shevan / May 22, 2016
Bandara
If Rajeewa’s anger is what keeps him writing about UL,then perhaps with few exceptions like you,majority of people would welcome same for notwithstanding whatever his personal motives may be,the facts are stubborn.
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second opinion / May 22, 2016
Dear Rajeewa Jayaweera
Might I draw your attention to the following.
Emirates is not a national carrier so your header ” tale of two national carriers” is wrong. Emirates is a private airline registered in the province (or the Emirate ) of Dubai. In-Fact Abu Dhabi based Etihad is the UAE’s national carrier.
Put things into perspective, it is a widely held view that Emirates tied up with Sri Lankan to get reciprocal landing rights Sri Lanka gets as a national carrier (which Emirates did not get as a non national carrier).
Sri Lanka is a democracy where people elect a government. Dubai and UAE is a monarchy where general public have no choice/right to select their leaders. Dubai/UAE is a kingdom.
Compare apples with apples. Sri Lankan and emirates are not comparable due to incompatible fundamental differences in the political systems, decision making protocols to name a few (too long to write here).
In a kingdom ” collective decision ” making almost never happens. Therefore your statement lack of interference in Emirates is totally true , because no one except the very top takes key decisions. Boss says jump, everyone jumps as high as they can. Things do not work that way in a democracy (i.e. in Sri Lanka).
Dubai is led by a leader who loves the country. He is a great visionary, respected and loved by everyone in Dubai (expatriates and nationals alike). He makes things happen for the benefit of his people.
It took Lee Kuan Yew 31 years to make Singapore strong, 23 years for Dr Mahathir bin Mohamad to give Malaysia life and belief , 31 years for Mao Zedong to make China a word power. They were not perfect, had many friends and a lot of enemies domestically and internationally (mostly in the west). But they had a dream for their country and they realized it.
What Sri Lanka needs is a leader who loves the country, A leader who walks to talk , a leader puts country before self , a leader who will stand up to his belief a leader who will rule Sri Lanka for two decades with an iron will.
Sri Lankan Air lines and Sri Lanka will be self sufficient 20 years from now if we find the right leadership.
Jayawewa
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Douglas / May 22, 2016
All the commentators including the writer have no hesitation in recommending the National Carrier – SriLankan be “Privatized”. I suppose this recommendation would have been made by the presently appointed CEO & COO who are paid Rs.3 million a month an equal to a Rs.100,000.00 a day respectively. Compare that payment with the recommendations given by the writer and the commentators in this forum- all that FREE. In giving that recommendation and relevant proposals; the main consideration is the “Incompetency” of the Government to run it’s own National Carrier. If that is the case, this Government is equally “Incompetent” to run the Government Affairs and must GIVE UP administering the country. At the rate Government is presently running its affairs, I have no doubt that the people would give that “recommendation” and “execute” it FREE in the near future.
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Rajeewa Jayaweera / May 22, 2016
Second Opinion
The term ‘national carrier’ has been used in the context of the Emirate of Dubai which no doubt is part of UAE but nevertheless functions independently in subjects such as Civil Aviation. That is the reason Sheikh Ahmad is President of Dubai Civil Aviation and a Board Member General Civil Aviation Authority of UAE. Whereas Etihad is the national carrier of UAE, nothing prevents EK from calling itself national carrier of he Emirate of Dubai, though not of UAE.
Original Air Services Agreement was between UAE (7 emirates including Dubai), Bahrain, Qatar and Oman with Gulf Air as their designated national carrier and then Ceylon. Emirates obtained independent landing rights in 1985. EK already had landing rights and had been operating to Sri Lanka for 13 years by the time they bought into Air Lanka in 1998.
The Singaporean ‘apple’ is a democracy. Its collective decision is to vest Singapore Airlines with TAMASEK, the company overseeing SOEs who in turn delegate the task to the SIA Board of Directors. The Board in turn delegates day to day operations and decisions to the CEO. Unfortunately the Sri Lanka ‘apple’ is unable to follow such a format.
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Sylvia Haik / May 25, 2016
Rajeewa Jayaweera, you certainly write like one Ranjith Jayaweera who lived in Borella and went to Wesley I once knew. Please tell me you are related as I like your style.
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Sunil / May 22, 2016
I congratulate Rajeewa for a good analysis benchmarking with Emirates. I was thinking today of writing to all Editors of newspapers that they must regularly benchmark every sri lankan sector with the sucessful sectors overseas, as otherwise our politicians will cheat the public by giving false promises like XX Per capita by 2020, yy jobs by 2021 etc. Another good benchmark will be Colombo Port with Jebel Ali Port. Colombo Port is as old as my great great grandfather. It is there from 1850’s. Jebel Ali Port started in 1985 and today does 18.5 Million TEU (Twenty feet containers), Colombo does only 4 Million despite being in the best shopping route. Arjuna Mahendran says in today’s papers that Mitsui of Japan was wanting to transfer the crane manufacturing to Colombo and our politicians are holding the matter for the past 1 year. I suspect there must be influencing from ZPMC of China through Access (local agent and wheeler dealer Sumal Perera) not to allow it. I am requesting that we start a movement to force the government to appoint only people with proven track record internationally to manage these ventures and bring foreigners to run it like what Sheikh Maktoom of Dubai did it.
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chuti putha / May 22, 2016
Few areas which need to be clear on Rajeewa s comparison. Yes , we do agree Emirates had a capitol of 10 million US and started in 1985 where Sri Lankan was set up in 1978.
What went wrong for Sri Lankan? well when Li Kuan You came to Sl during the Commonwealth and said he wants Singapore to be Sri lanka. Destiny changed in 1983. Since 1983 the revenue and the opportunities lost cannot be matched with anything. We have to be thanked that we still are developing mainly because We Sri Lankans are educated and talented to thrive in life with work by having a civil war for 30 odd years when we groomed our corrupted politicians.Dubai is run by expats, the amount of Sri Lankan working in Dubai and helping that Nation to do well. There are two things to expand strategically to find out the reason of Sri Lankan Airlines failure.
Look at Maldives. They do not have a National Airline hence they diverted all the tourism strategically when they realized the demand for Holidays from the WEST. Thats the opportunity Sri Lanka lost and will take another 15 -20 years after the post WAR ( 2009) . Do not forget John Keels, Hayleys, Aitken Spence the three biggest Blue Chip Companies in Sri Lanka went and established 5 Star resorts in Maldives by passing your own country due to stability. Demand for island Sea, Sand and Sun concept which exists in Sri Lanka with the cold climate in the Hills would have nade Sri Lanka nthe gem of a destination in the South Asia had much better potential than the Maldive Islands had the capacity to expand and thrive but post 1983 culture of Racial tensions and the advantage the politicians took of that tension to create Sinhala/Tamil conflicts to come in to power and sustain it ( unlike Dubai has a ruler who doeskin change the policies ) by changing the policies to put them selves in first than the country. Sri Lankan lacked the chances to capitalist the potential of tourism for 30 odd years which could have helped the Airline to perform. Dubai had that advantage when they made the dessert in to a global Tourism destination. Its not the Routes, talent and Capital made Emirates the best Airline. They did the initial things first since they had a vision, it was not known , a tiny destination in the Middle East , by establishing DNATA first by Flanagan. DNATA then channeled the essential strategies to create Emirates one of the best Holiday destination by using the Stability, Wealth, Tax free attraction for Companies to come and set up, creating a Open Port concept to attract Free trade within the Law of the Country and attracting best brains to come and work for them. They realized the potential of migration to Dubai which made them to strengthen the network for Far east destination to make more revenue at the initial stage of the operation. Then once they developed the Tourism they linked Dubai with the Europe and North America.Having a instability created more room for Dubai to sell the SUN, SAND, and the warm weather in Dabai for Winter Tourist. The strategy of selling what you have in you country could always help other parts of your bsuienss model to thrive , in this case it would have helped Sri lankan airlines.
What we lack those days and still is the Vision for not appointing the right person to the right place, we have been suffering with the WAR which brought instability since 1983- 2009 and even after that change of policies by subsequent governments failed to capitalize. In 2010 appoint Dr Rohantha Athukorala ( our answer to Mourice Flannegn of DNATA) for a very strategic position at the Toursim Ministry failed to get the best services out of him when governments changed when the current GM of the Tourism promotion Board is non other than an unqualified mistress of the ports minister which takes the country backwards. EMIRATES never had these issue. So we cant simply say Oil rich Emirates used its wealth to over come, they had the VISION.
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Siri / May 22, 2016
The man who put China to this is level is not Mao but Deng Xiaoping. When Communism and Socialism were crumbling in the Soviet Union, Eastern Europe and the world over, he opened up China to the world. In 1979. when he started the Free Economic Zones and Stock Exchange in Shenzhen, in the beginning no one went there, only the Hong Hong Chinese took note of it, and started every thing there. when it became success, the American started to invest there, after that the whole world followed them into China. The Chinese learnt every thing from these people and out smarting them in their own games. Now they are very smart and shroud capitalists than all of them.
When the Chinese President Xi Jinpin visits other countries, he takes all the billionaire along with him, like founder of Alibaba, Baidu etc to show the world about the new China, and it’s leaders consult and listen to them.
They took lot of pain do it. In the 80s and 90s 23 million workers were sent home from the bloated inefficient and loss making state enterprises to make them viable and profitable. Now, their steel and coal industries are bleeding due excess capacity and inefficiencies, in coming years to revitalize these businesses, they are going to send home 6 million workers.
If you go the big cities, one might wonder that you are in America, when you see the faces of the people and the signs, then you realize that you are in China.
The prosperity is only in Southern and coastal region but it’s not yet reached the Northern and Interior regions. Most of the factories are manned by the cheap labor from the Northern and Interior regions. These workers should get permits to stay and work, otherwise they depot them back to their homes regions. Now China is negotiating free trade agreements with Japan and South Korea in order to develop the north.
Recently one Chinese businessman said, if the Chinese wake up 5 am in the morning for work, the Vietnamese wake at 4 am, see how hard they work to build up their countries. Who is in the fore front with US to get the Trans Pacific Partnership going, it’s Vietnam. They are well aware the free zone of 24 countries give them huge advantage for them to trade. That’s what they are joining with their one time worst enemy to get it done.
Vietnam, India, and many other countries opened up way late of us, see where they are now and where we are. In this globalized world. if you want to attract foreign investment, our small market is not sufficient for them and they require easy excess to big markets. All countries, states, regions and municipalities are clamoring for investment, the one offering the best, get it all.
For the survival and prosperity of our people all those trade agreements the government is negotiating are essential. Those opposing are living comfortably, selfish, mean and not thinking of the people who are poor.
Further, look at the new container terminal run by the Chinese in the Colombo Port, within it’s short span of times, handled 2 million containers with 1000 workers whereas one run by SLPA handled double that with 5000 workers. Since, these are government owned, like all the other government businesses, to make up for the short falls dues to their inefficiencies and mismanagement, government tax the people – raising VAT, duties, etc. Unless they perform well, it’s always better to sell them and save the people from unwanted headaches and miseries.
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Lanka Watch / May 23, 2016
The commercial sector in SL is run efficiently by the locals and many
companies, with large staff strength, are making thumping profits and there is no dearth of talent among our people in this country to run an airline. The problem, as the author of this article says, that it is abundantly clear that the govt. cannot run commercial enterprises because they have to plant friends, party workers and relatives to fill top positions, which is inevitable , specially the board of directors and above. How could they make profits with political goons running the establishments and Sri Lankan airlines was one.They should be knowledgeable in the field they work.
On assumption of office, the Govt.knew very well the financial position
of the airline and they should have privatized it, by handing it over to commercial establishment/s in SL, to the largest bidder or to a consortium and pumped a sum of money to off set part of the debts, incurred by the airline with a view to get it back and allowed it to run without interference, with instructions to run it without showing loss, initially. Today we could have seen some leading private company directors in the board who would not have danced to the tune of the politicians and done their job of revamping the airline and by now they
would have pruned the staff strength to a required level,cut down on unprofitable routes, closed the other white elephant ‘Mihinair” , selected the right type of aircraft and set a plan for recovery as there should be a plan to replace aging aircraft with new ones to stay competitive in the airline market. Greed to fly into many unprofitable routes for prestige sake, no planning for the next ten years, Govt.
interference, filling the top positions with unqualified staff were some of the major causes for the down fall of the airline, which won rewards and made profit in the past.
Joint venture with another airline is not advisable as the Govt/Sri Lankan management are not smart enough to fathom the extend of help the partner could give or take as any agreement will always favour the
JV partner if the other partner is not smart enough in negotiations.
They will eat into our profitable routes as decision makers will be
from the JV partner. It is better to engage aviation experts to assist
the board as we got to admit that we do not have commercial aviation expertise but management should be under the hands of Sri Lankans
.
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BBS Rep / May 23, 2016
The tale of two national carrier woes continues.
Shut the airlines down. It is a dead weight on all Sri Lankans. Which politician has the guts to do so. It is bleeding Sri Lanka dry.
If you can’t shut it down then privatise it.
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sumane / May 24, 2016
People just dont waste time in writing, commenting and accusing each other.What is the main reason for this loss making ? Has the new Management, board,Corp committee in the parliament acknowledged or knows to handle this ? The main reason is the aircraft lease values. The new A330 has a lease payment of 1.3 or 1.4 million USD per month.In actual fact it should have been only US600,000 or maximum US800,0000 per month.Now here is the issue, even if the full aircraft is sold at Business class fares you cannot make 1.4 million a month!.Plus the crew layover,fuel,landing,parking charges add on to the ROUTE cost and then we say route is making losses and we pull out of that route.That’s not a smart move but a total absurdity on the part of so called new learned lot.First look at the lease contracts, the last regime,CEO,family took the loot and laughing all the way.Why are we still farting around, crying loss,loss and hitting the workers,Cutting the most minute edges?
Time to get the first blunders fixed with the politicians, and rectify the lease cost. Years before we found out that it was cheaper to run four engine A340 than running a Two engine A330, food for thought. All those who silently made this happen are still there,without raising the flag.Time to act without just giving bridal talk in media
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Ajantha / May 26, 2016
what have you done when you with UL? [Edited out]
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