2 December, 2020

Blog

All Is Not Well At SriLankan Airlines

By Rajeewa Jayaweera

Rajeewa Jayaweera

Rajeewa Jayaweera

At the request of Shareholders, Chairman of SriLankan Airlines called for a Shareholders’ meeting on 19 January, at the BMICH. The agenda consisted of an update on Travel Privilege Policy for Shareholders, an indication of share price expected from GoSL and an update on the progress of the Company. Shareholders were requested to make written submissions, on any other matters they wished to discuss.

The Chairman commenced the meeting by announcing three sugar candies. He was applauded when he announced the removal of Fuel Surcharge Tax for all Shareholder tickets granted last year, on the basis of two tickets every two years. Shareholders could henceforth transfer their two free tickets to children up to the age of 24 years, provided they were students. Shareholders could transfer their shares to children below the age of 18 years combined with a nominee, and directly to those over the age of 18 years, as per the law of the land. Such persons would be eligible for all Shareholder privileges. On the progress of the company, the Chairman stated; the company continued to make losses, but the level of losses had been substantially reduced (the reality being the reduction of losses are chiefly due to dwindling fuel prices rather than any other factors); profitability could become a reality in two years; It was being contemplated to close unprofitable routes; increase capacity in profitable routes and explore new routes; efforts were being made to dispose of the Airbus A350 aircraft ordered by the previous Board, which both the airline and Treasury could not afford.

The floor was then opened for questions by Shareholders. In the course of responding to questions, the Chairman made some startling revelations.

A group of Shareholders had formed a Shareholders Association. It’s President had requested for a reasonable price to be paid for shares currently held by Shareholders. The Association’s President demanded the company pay the ludicrous amount of Rs 5,000 per share, originally given to employees in 1998 free of charge. Subsequently, Emirates purchased shares from staff willing to sell, at the price of Rs 245 per share. A representative from the Treasury, who was present, stated emphatically, the amount on offer was Rs 50 per share. The Chairman was then requested by the President of the Association to facilitate a meeting with President Sirisena to take up their grievance, to which he agreed.

The Chairman graciously accepted a suggestion by a Shareholder to commence a Suggestions Box. Since all Shareholders have airline experience, they may be able to make constructive suggestions for the improvement of the airline.

In response to the question how the airline had fared in the peak month of December 2015, Chairman stated the month had been profitable. A staff member from the Finance Division present informed the Frankfurt, Paris and Rome routes had incurred losses. The Chairman emphasized the airline had made a NET profit of USD 2 million in December. Net profit is arrived at after deduction of all expenses, including Finance Charges. However, clarification could not be obtained if Net Profit in this instance was before or after deducting Finance Charges. The national carrier has not had a net profit in airline operations in decades!

During an Emergency General Meeting held on 16 June 2015, the Chairman had stated a Recovery Plan had been submitted to the government for approval. The airline did not have a professional CEO or a Chief Commercial Officer (CCO) at that time. He declined a request by Shareholders for details of the Recovery Plan to be shared, prior to approval and agreed to share same, once it was approved. When requested for details of Recovery Plan on 19 January 2016, he explained 80% of the plan had been approved by GoSL but remaining 20% was still pending, and hence details could not be divulged. He further stated some parts of the approved 80% of the Recovery Plan were currently under implementation.

In response to a question from a Shareholder on the benefits derived from the One World Alliance, Chairman stated One World Alliance was vital for the carriage of passengers from USA and Canada in the transatlantic sectors of the journey. He further stated, since flights from USA and Canada do not connect with SriLankan Airlines flights at Heathrow, and its inability to change airport slots, it may be necessary to retain Frankfurt which has favourable connections. This is indeed a strange theory. Frankfurt, Paris and Rome have traditionally been loss making routes, despite around 80% of its traffic being 3rd and 4th freedom traffic. Revenue from such traffic belongs totally to SriLankan Airlines. Passengers from USA and Canada is 6th freedom traffic. Revenue derived from such traffic has to be shared with One World carriers for transporting them in the transatlantic segments of the journey. Therefore, net retention to the airline from 6th freedom traffic would amount to much less revenue than from 3rd and 4th freedom traffic at European points. It is mind boggling to understand the need to close loss making stations earning higher revenue, but maintain one station to cater to markets, in which net retention is lower, and hence will further increase losses in the route.

It is indeed a strange situation. The airline is heavily burdened with cumulative losses in excess of Rs.90 billion, as stated by the Chairman. Seven months on, GoSL is yet to approve or reject the proposed Recovery Plan, despite no change of government. There seems to be no sense of urgency for a ‘recovery’.

Management text books state, a plan is required to be approved and implemented in its totality. The nucleus of a Recovery Plan of an airline is it’s Route Network, which is critical for its core business of passenger and cargo carriage. Other key factors such as Fleet type and size, Manpower to name a few, depend entirely on the Route Network which, as per the Chairman, is yet to be finalized. According to him, some parts of the approved 80% of the Recovery Plan are currently under implementation, despite the lack of a finalized Route Network. i.e. which of the current routes are to be discontinued, retained and what new routes should be introduced. One is bewildered to understand, if route rationalization amounts to less than 20% of the proposed Recovery Plan, what constitutes of the approved 80%? Equally bewildering are the parts of the approved 80%, currently being implemented, without the vital component of a Route Network.

When turning around loss making concerns the world over, the usual modus operandi is for the Board of Directors to recruit a high profile CEO with a proven track record and task the person with the preparation of a suitable Recovery Plan. Once approved, the CEO is required to put together a management team and proceed with implementation. All these actions will have specified time lines.

This does not seem to be the case at SriLankan Airlines. Having submitted a Recovery Plan to the government for approval, recruitment of senior staff has begun with a vengeance. Advertisements were placed for posts of CEO and COO in May 2015. An impressive array of qualifications and experience consisting of Master’s Degree for the CEO and Bachelor’s Degree for CCO coupled with a minimum of 10 – 15 years senior managerial experience were listed in both advertisements. A former Air Lanka pilot who subsequently worked for Emirates in a similar capacity with no senior managerial experience was recruited as CEO on 01 October 2015. A onetime CEO of the airline, exiled to UK with the meaningless designation of Director Promotions Europe, by the previous administration with a five year contract at great cost to the company was brought back to Colombo as CCO to assist the new CEO. We now hear, this CCO with over 30 years’ experience in the airline has been sent back to UK with a further extension and has been replaced by another former Air Lanka / SriLankan Airlines employee, who had been working for a private airline in Nigeria. It is rumoured, both selections had been opposed by a majority of Board members; they had been over ruled by Royal edict. There are serious doubts if both selected persons possess the requisite educational qualifications and professional experience specified in the respective advertisements. At least one of them is over sixty years of age. A new position of Chief Technical Officer (CTO), scrapped after the departure of Emirates Management, is to be reintroduced shortly. It is expected to be filled with an expatriate. Based on another Royal edict, the post of Chief Marketing Officer (CMO) is being kept open for an Emirates employee, due to retire upon reaching 60 years next May. This would be the third time he would be joining the National Carrier.

With such Royal edicts, the much hyped about Temasek type holding company, based on the Singapore model is obviously meant for public consumption only. Recruitment does not seem to be based on the relevant qualification matrix specified in respective Job Descriptions and advertisements. It would also appear greater weightage is attached to membership of the Royal clan and cronyism.

It is but natural to wonder of the need for such a top heavy structure at a time when the much awaited Recovery Plan is yet to be approved and the Route Network is yet to be finalized. It is obviously a case of cart before the horse. It behoves the Chairman to explain the logic and reason to send back the former CEO to UK and recruit an additional person as CCO, who has passed the airline’s retirement age. In light of the Engineering Division having functioned with its incumbent head during last several years without any mishaps, it behoves the Chairman to explain the need to recruit a CTO in addition to a former Snr. Manager Engineering already on board as a Consultant. It behoves the Chairman to explain the need to recruit senior management staff that have exceeded the company’s retirement age. Does an airline with 21 narrow and wide bodied aircraft warrant such a management structure? Would it be correct to estimate the price tag for all these recruitments to be far in excess of Rs 100 million annually? Can the airline afford it? Should not all these recruitments other than that of CEO been held back till clarity is established by way of a fully approved Recovery Plan and Route Network?

From a different perspective, the CEO of Qatar Airways Akbar Al Bakar obviously did not meet with Prime Minister Wickramasinghe a few days ago to inquire of his health! In the event of handing over the airline to a foreign carrier, who would compensate all these heavy weights, currently joining the national carrier?

Meanwhile, merry making in the National Carrier, notwithstanding monumental losses, continues. Even though the heads of the infamous former Chairman and CEO have rolled and replaced by two others, there is no change in corporate culture. It continues to be a paradise for joyriders. Another case of ‘same wine, new label’.

Obviously, all is not well at SriLankan Airlines!

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Latest comments

  • 6
    7

    Fantastic analysis Rajeewa. Factual and I cant agree more with you. Why the hell cant this man and his knowledge be made use of by our national carrier?
    I am sure Rajeewa would replace at least a 5 to 6 top heavy senior managers with ease. If only those in governmental power would stop to listen or perhaps to read what he writes!

    • 1
      1

      This airline should not be allow to operate feather with POORMAN’S PARIPPU tax, either it must be sole to somebody or close down it and close the chapter.

  • 0
    0

    We have produced a report spending Millions. What more you expect? This is Sri Lanka. Yapalana!

  • 4
    2

    Rajiv

    Excellent analysis and well done.

    The accummulated losses are well over Rs 100 billion. We could have built 100 schools or 50 hospitals!!!

    Imagine the state of the airline if you cannot make profits when oil is at USD 29. Just think of the situation if oil goes to USD 50 per barrel???

    As quite correctly pointed out Sri Lankan has not made any profits for decades on passenger traffic. The only profitable units are catering and engineering.

    Also Sri Lankan has almost 100 staff per aircraft well above industry norms. No different to CTB having 9 staff per bus.

    I am sure PM is aware that Sri Lankan has no future in the current operating environment with middle eastern airlines dominating traffic in this part of the world but does not want to close it down at this point.

    To be fair by the board I am being informed that they dont receive directors fees but are entitled to free tickets only. Previous board received fees and tickets and other fringe benefits !!!

    Some immediate steps to be done:

    1 Well drawn up recovery plan
    2 Rationalize route network
    3 Look for a JV partner
    4 Segregate catering and engineering operations
    5 Professional management
    6 Professional board members
    7 Reduce staff
    8 Improve load factors and yield
    9 Position as a regional airline serving West , South and East Asia.
    10 Pursue Colombo as an engineering and maintenance hub

  • 9
    6

    Interesting article . The national carrier always earns a lot of flak regardless of the prevailing state of affairs inherited from the last regime who (mis)managed it. Slow progress has been a thorn in most state owned organisations.

    Strangely , the writer , who is an ex employee of the national carrier with a record to match the current mismanaged process has opted to write this article . It is reliably understood that he too applied to the job of CEO , in spite of his proximity to the age of 60 !!! Grapes are not always sweet . Perhaps this article would prompt the airline to make the changes and bring him in an as a veteran marketing head or CCO or CEO and raise the age barrier to 70 ?
    Something for the management to think of !!!.

    Furthermore , one member of the board was aspiring to become the CEO after his brief stint in an acting capacity too was close to 70 . There are pilots and engineers and finance experts who have become CEO’s of other airlines and what matters is their ability to make the change to profitability . All this stays in the hands of the owners GOSL to define their vision for the airline and remove the political shackles to make the airline perform.

  • 7
    0

    The biggest shareholder and stakeholder in the air line is sri lanka and it 22 million people.

    Almost from the beginning they have been meeting all the billion losses made by air lanka.

    Please tell us who the directors of this airline are, how they got there, and the benefits the directors are enjoying now.

    That will tell the true story behind all this BS by the airline management.One set of rogues replaced by another !

  • 2
    0

    As I see the bottom line, the Country and the People must be held accountable for this gross inaction by the Chief Shareholder of Sri Lankan… THE GOVERNMENT, who you and I voted into power hoping like hell that they will turn everything around. SIC !!

  • 10
    6

    Mr Gregory Fernandopulle

    Since you have raised the issue, please permit me to clarify.

    Yes, I did respond to the Press Advertisement for post of CEO. The worthies who drafted the advertisement did not specify an age limit. In many companies, its retirement age does not apply for post of CEO, similar to posts of Chairman and Managing Director. For your information, I was not called for an interview, perhaps as I did not possess a Master’s Degree as required in the advertisement. The matter ended there. No canvassing was undertaken.

    A company’s retirement age is mandatory for Chief Officers / Executive Vice Presidents and lower grades. All former Chief Officers who worked for the airline retired from service upon reaching 60 years of age. Since I uphold the company’s retirement age, I did not apply for post of Chief Commercial Officer. Several others applied for both CEO and COO positions,perhaps due to anomaly in the advertisements.

    Theoretically, pilots can make good CEOs. On the practical side, hands on managerial experience is vital for the job. The problem is, when do pilots have the time to acquire senior managerial experience, whilst flying to maintain their Pilot’s License current? May I suggest you read what Singapore’s visionary leader Lee Kuan Yew had to say to ex President JRJ on the appointment of a Pilot as a CEO.

  • 5
    2

    This airline has always been the goose that lays golden eggs for those that come into power. No one will ever let go of the opportunity when in power as this airline provides millions in commission for every single deal made.
    Sadly over the last three decades all that the airline has done is to recruit,develop and feed quality employees to the middle eastern carriers.
    Prime Minister Ranil Wickramasinghe should take a firm stand bring back some of our very own top airline officials and pool their learnings, resources and knowledge and hand it over to professional personnel to run it.
    By reading this article alone, we can safely establish that here is one of those people I am talking about. Professionals for each and every department could be brought back and offered a reasonable package to them to re-shape and make this airline profitable.
    The current CEO Suren Ratwatte will not rock the boat as he is on his last leg of five years prior to retirement. His current package is supposed to be easily three times more than what he was getting as an average middle management official with Emirates Airline.
    Chandana De Silva who was instrumental in selling off the airline to Emirates earlier is also been tipped to join the airline on his retirement from Emirates soon. Perhaps he should go and enjoy living in the apartment which was provided to him on the Sydney Harbour as a reward for pulling the deal through with CBK.
    Cant we find one person who is really genuine and passionate at the top to make this airline profitable and be the cynosure of all eyes at least in the region?

    • 0
      3

      This airline simply cannot be made profitable!!!

      Even with crude oil at USD 29 per barrel it is struggling.

      We have over Rs 100 bn of losses. Best is to sell it off or cut down European routes and run it as a South Asian air line.

      All govt owned airlines in the region are making losses. Aair India, PIA, Biman Bangladesh, Nepal Airlines, MAS are all running at losses!!!

  • 9
    0

    Mr. Rajeewa Jayaweera

    It appeared you were an ex-employee of Airlanka/Srilankan Airlines. I am not certain what was your role or accomplishment whilst in the airline. Perhaps it is worth if you can highlight to the readers in this aspect as well? Any reason as to why you left the national carrier? Were you by any chance subject interdiction? If so can you elaborate on this? I am sure we need experience airline managers for our airline and thus I am not too worried about the retirement age as long as they are in good health to perform their duties. Do you know if current CEO and CCO of Srilankan held very high management positions in other airlines? If so can you let us know their background as well?

    • 2
      1

      By any chance you are NOT that BANDARA of UL fame !!!

  • 0
    0

    Yes but then again Jagath the you mention here are all run on the same lines as ours, cronyism etc, etc so they are prone to fail. How about looking at SQ, Air Asia, Air Arabia where they understand aviation better and apply appropriate polices that brings in revenue ?!

  • 7
    0

    Current CCO Mr Siva Ramachandran’s LinkedIn profile gives his management experience, since I don’t know him that’s my only source, after reading that I can’t fault him

  • 13
    8

    Dear Mr. Rajeeva

    While I must commend you on you in depth analysis of the present situation of the national carrier, it stands to suggest that you are quite negwtive 9n any or all decisions taken by the present company board of Directors.

    Clearly you seem to have been present at said shareholder meeting, if you were not it would be quite disappointing as you would blowing a used trumpet. Please do share with us all your past employment history and relation to the national carrier.

    With regard to one world alliance fares, it is quite amusing as to how you have based your statements on revenue apportionment or sharing between alliance partners when you have absolutely no understanding of the mechanisms in place for said fares. You seem to be unaware that all oneworld fares are approved in such a manner so as to ensure that UL gets the required retention due. This would mean that the revenue from selling a 3rd and 4th freedom traffic ticket would be in the same fare range as the retention from a 6th freedom ticket (this rule applies to both oneworld and other interline fares).

    With regard to the so called former CEO in exile, you seem to be quite fond of him and apparently feeling the need to fight the fight on his behalf. So then would it be news to you that this former CEO in his interim term as CCO, was tasked with spearheading the organization restructure. The man you are implying shiuld be retained at the helm of this organization has implemented the plenthora of senior management changes and proposals you yourself are openly questioning. Further, how do you assume this individual is in exile? are you not aware that it is as per his request/ insistance that he is based in London? are you not aware that he himself created the new post that he is presently holding? are you not aware his ties to the former regieme of this country? or the even sronger ties his strongman brother enjoyed while in parliament??

    Clearly you have industry knowledge, as it is evident you have worked for the airline in past. However this attention seeking stunt of yours is not only detrimental to the National Carrier, but it could furter create unnecessary animosity by the public against the hardworking staff.

    It is true, there are staff in the organization that are a burden on the airline itself, however the labour laws in this country leave little room to do anything about it. What can anyone do if said staff have no work ethic or relevant skill set. Depriving the airline of another ataff which would be required to do the needed tasks is vital and as such unavoidable.

    With regard to age of retirement in the organization, you seem to avoid the relevant fact that said ahe criteria applies to permanent employees of the organization, the CEO/ CCO have been hired on fixed term contracts. yhis is the norm in any situation when individuals have been hored to carry out a task in a give time frame, these are important facts you seem to have bot felt the need to look into or simply have chosen to avoid sharing in order to further support your sad and disgruntled views.

    The way you have chosen to describe the appointment of the airline CCO implies he is a has been with no relevance, perhaps you should let readers know that while he may be over 60, ,he has served in senior managerial positions of more than 3 airlines, the last post being a senior vice president of the commercial division. This experience alone puts him at top of the line for said role.

    Perhaps you are indeed an able individual in aviation; but as much as it seems to pain you to consider, open your eyes and accept the fact that perhaps you are not the ideal character for this role and hence were not shortlisted for assessment.

    Further as a shareholder yourself (assumtion that you are not some sad individual harping on a friend or colleagues rant – post Shsre hholder meeting), you fail to mention that the benefits given to the shareholders were as a result of the demands made by them and the repeated protests made to the Board.

    Your analysis holds merit, however the misinformation that sadly forms the core base of your seemingly biased views, be it accidental or on purpose casts a dark shadow on any comments you may have on the matter all together.

    I only hope that you are unaware of the facts i have included in this post and accordingly would rethink your views on the airline. Failing which it really doesnt matter as long as the public remains informed.

    A concerned yet informed citizen.

  • 3
    0

    The Board of Directors, including the Chairman must first understand and recognize who the real “Share Holders” are. If they do not know how to identify that, let me tell them, those “Real Share Holders” are none other than the “PEOPLE” of this country whose money has been PUMPED into a “Black Hole” with no end in sight. This very fact has been very conveniently IGNORED over the years of its operations by those in Management and have carried on regardless of what happened to those funds injected year after year. So this “Action Plan” of recovery should have been placed before the PUBLIC for scrutiny. If the Government can present the entire country’s “Action Plan” in the form of the BUDGET, why the Management of this Airline cannot present their “Recovery Plan” to the PUBLIC. That SENSE of “Responsibility” and “Accountability” must get into heads of those in Management. That is the FIRST thing, as a matter of fact, any Management of a Public Institution must bear in mind. “RESPONSIBLE and ACCOUNTABLE to the PUBLIC – the RECOVERY must begin there. Let us know first what your ACTION PLAN is and then we will make assessment of where WE are heading and whether it is WORTH continuing.

  • 1
    0

    Mr. Jayaweera: In your reply to a comment, you said of a remark made by the Singaporean ex PM Late Mr. Lee Kuan Yei to Late Mr. JRJ in regard to the appointment of a Pilot as the CEO. This was in reference to the appointment of Capt. Rakhitha Wickramanayake as the Chairman/Managing Director of Air Lanka in 1979. Did you know what Mr. JRJ did in taking that advice? He got Mr. Lee Kuan to send one of his strong men of standing in the Financial field on “SECONDMENT” to UL as its General Manager. His name was Mr. Kulasegaram and he held the post of Director, Finance of Singapore Airlines. In addition he was also a member of the Board of Finance of the Singapore Government. That COMBINATION of a Pilot and a Finance/Management persons brought in the National Carrier called Air Lanka with the “Taste of Paradise” selling slogan. But the very man (JRJ) who initiated a very prestigious National Carrier named Air Lanka, “RUINED” it over a controversy built with the then Chairman/Managing Director around a “Family Matter” relating to an “Internal Disciplinary” process that was on going at the time. Perhaps you would not have been there at that time of the day. If so, this is for your information and correction of facts relating to UL “History”.

  • 0
    0

    Oh dear Mr.Rajiva Jayaweera [Edited out]

  • 4
    0

    Oh dear Mr.Rajiva Jayaweera as CEO of Srilankan… at60!!!God bless our tottering Monara!What next?Perhaps Stanley J back as Ambassador to Germany?Or baldy Neville J. back as Chairman /SLBC?Hudson Samarasinghe are you reading this?!!

  • 0
    0

    It seems that the Jayaweera [Edited out]

  • 1
    0

    I can relate to this rant in a sort of a way. The Author is obviously well versed in the subject and has a passion for the airline and the job he aspires to.

    Let me tell you sir, there are dozens of such people in Sri Lanka and possibly thousands in this world.

    My advice, forget it, the Sri Lankan system is too corrupt for anyone except the “players” who themselves get played in the end !

    Get a life my friend and hang that airline and everything it stands for.

  • 6
    0

    Regardless of what Mr.jayaweera has been doing at Airlanka/SriLankan on one hand and under what circumstances he had to leave SriLankan,one has to agree with what he has written on the current status of the Airline.The facts are stubborn and cannot be repudiated if only one is willing to look at them in an unbiased way.

    The suitability and experience of both current CEO and CCO have been highlighted by some even quoting whats being shown in different social media including Linkedin.These entries obviously are been fed by the Individuals themselves and whilst may be true as for the positions held they do not necessarily mean that they have any reflection as to how they performed on the job.Does change of jobs at regular intervals indicate exceptional job performance ?

    To be fair by the two Gentlemen currently holding the above positions,they do seem to posses necessary experience to hold senior positions in the Industry but the issue at hand is whether such experience is good enough for SriLankan specially at a time when every hope appears to be lost.What authorities should have ensured is to recruit top professionals who has the requisite experience for turning around troubled Airlines rather than employing people who could have performed if things were running smooth.Many troubled Airlines have taken that route with results.

    To be a Royalist may be considered by few as a privilege but should such affinity take precedence even at the expense of national interests ?Arent these the very issues the previous Regime was accused of and the majority of people of this nation voted against ?

    • 1
      0

      Ex UL staff

      It seems a privilege to be from Royal College @ SriLankan, at the last count more than half of the dozen or more Chief officers and Heads at the top two levels of the organization are members of the FRCS (Former Royal College student) group

      If I am not mistaken, they are Capt. Suren Ratwatte, Siva Ramachandran, Manoj Gunawardena, Capt. Rajin Ranatunge, Capt. Druvi Perera, Mahesh Nanayakkara, Chanaka Olagama, Yasantha Dissanayake, Chamara Perera and if you scratch the surface of the next level of management, there’s many more and there is Capt Pujitha Jayakody from Mihin …the list goes on and on…

      and oh the Chairman Ajith Dias, director Mr Chanaka De Silva…Kapila Chandrasena of ex Mihin and Sri Lankan

      I am not sure about Head of HR – Pradeepa Kekuluwawela, maybe he is from the FRCS club too

  • 0
    0

    recently flew Rome-Colombo on UL as a 6th freedom passenger and the flight had a load factor of 100%. Flew to South East Asia on UL again and even the return flight had a LF of 100% but then again I think this is because of seasonal traffic.

    The funny thing was that my routing was done by American Airlines, flew American and UL, but my miles went to Qatar lol… UL is too expensive and can’t provide competitive prices when compared with the ME carriers. I guess it isn’t totally UL’s fault since it is highly rumored that the ME carriers are backed by their countries.

    Also UL’s pricing is faulty for being too cheap.. I have read that Airlines with 2 class layouts make profits when their business and first class seats are occupied ie economy revenue providing nominal benefit but UL’s business class fares are much less when compared with other airlines for the cabin space they take up in an aircraft. To make it profitable, switch to premium economy which allows for a ton of seats with like a foot of extra space but at a cost of like $100 more. It wouldn’t be too much of a concern for the longhaul flyer already paying alot of $$$$.

    whenever I land/takeoff from BIA I see like 3 UL flights at the hangar. I know there are annual checks etc but 3 aircraft is like 20% of the fleet just idling away.. such a waste of resources.

  • 1
    0

    Thanks to Rajeewa from bringing us news from the Share Holder Gathering.

    My thoughts, today’s 60 is the now 40. So age in no barrier if one keeps with the changes and moves along further.

    As for the CCO, Ramachandran ( aka Rama ), he has stellar cred. He started his career at Singapore Airlines, Joined Airlanka, joined Qatar Airways and then at Arik Air ( A Nigerian Setup ) before rejoining Srilankan. At all points he held Snr. Positions at the carriers.

    And then Manoj, an Airline Professional he is, with the added blessing of being connected, to the connected.

    Btw, ” Bandara ” good to see you comment on your former colleagues post.Where have you been ?

  • 0
    0

    Vishvajit: You seem to be knowing this “Ramachandran” (aka Rama) very well. Can you please tell us the positions he held in Singapore Airlines, Air Lanka and Qatar. Now that he is the COO we would like to know something about this “Rama”. Thank you.

    • 0
      0

      Douglas.

      Yes, I know him. We worked together at UL, in the Marketing Group. A crème de la crème in the Airline Industry in SL.

      Rama was poached by UL from SIA to join our ground handling dept, he then moved to Marketing/Commercial.

      This may give you some indication of Rama’s background.

      https://www.linkedin.com/in/siva-ramachandran-b3836429

      Cheers.

      V.

    • 0
      0

      Douglas,

      These are the positions he held

      Singaproe Airlines- Station Officer Colombo and subsequently in Dhahran when Singapore Airlines closed their Colombo operations.

      later he Joined Air Lanka Colombo as a Station Manager and moved to Saudi Arabia as the Country Manager in 90s supposedly through the grace of mr.Paskaralingam who was the king maker of the Airline at the time.

      In 1996 he returned to Sri Lanka and was attached to Commercial Division as a manager overlooking Tariffs department.

      In 1999 he was successful in getting a posting under the EK Management to Dubai as the Regional manager Middle east and subsequently to UK on a cross transfer.

      Whilst in UK he joined Qatar Airways as a REgional Manager and it is rumored that he made the switch since the SriLankan Management did not accede to his request for a further stay in UK.

      Having served Qatar Airways for few years he once again switched employment
      when he was transferred out of UK to South Africa.Susequently he is supposed to have held various Senior Positions in Commercial areas at Kingfisher,Jet Air and the last at ARIK Air a private Airline in Nigeria

  • 8
    8

    Eye Opener

    I usually do not respond to comments by anonymous and faceless commentators. However, an exception is being made on this occasion on the two issues of One World Alliance and appointment of CCO. The anonymous writer’s comments, possibly assisted by one or more interested parties are a distortion of facts.

    Revenue apportionment for tickets containing sectors of any two carriers is based on Prorate agreements between the two carriers i.e. SPAs (Special Prorate Agreements). In the absence of an SPA, MPAs (Multilateral Prorate Agreements) may be used. In the case of MPAs, the ATBP (Amount To Be Prorated) is subject to Straight Rate Proration across all coupons

    The carrier playing the lead role in negotiations has a distinct advantage over the other carrier due to inability to discuss / negotiate fares in view of Anti-Trust laws. In this instance, the lead carrier would be AA. UL’s need to defend it’s market share in USA is greater than AA’s need to defend its market share in Sri Lanka.

    Take the example of American Airlines (AA) and SriLankan Airlines (UL) negotiating an SPA for city pairs involving AA and UL feeding each other via Frankfurt. AA through their local office in Frankfurt and GDS systems can easily ascertain UL’s Market Fares in the Frankfurt / Colombo route and will request SPA fares lower than UL’s Market Fares in Frankfurt. Key to their deliberations will be prevention of the dilution of their own US/ Frankfurt traffic (AA’s 3rd and 4th freedom traffic) and fares offered by carriers such as Emirates, Qatar, Ethihad etc. from US to Sri Lanka.

    On the one hand, AA will not displace their US / Frankfurt passengers for the carriage of US / Sri Lanka passengers. Due to this reason, AA will offer SPA fares in a limited number of RBDs in order to prevent revenue leakage and displacing their 3rd and 4th freedom traffic. On the other hand, both AA and UL will need to offer competitive Through Fares from USA to Colombo, to compete with Middle Eastern carriers and ensure a reasonable Market Share.

    Should it be the case that both carriers insist on retaining same Market Fare levels or higher, it would result in very high Through Fares with the end effect of traffic moving to other carriers and loss of Market Share for UL. The only solution in such a situation would be for UL to take a beating in their flown sectors (3rd and 4th freedom traffic).

    Regardless of mechanisms in place, the basic principles of SPA negotiations remain unchanged.

    Having been an ex colleague of the new CCO, I am well aware of his past experience. My comments are not in relation to his experience. They are in relation to the company’s retirement age and manner in which appointment has been forced on the company. Fixed Term contracts notwithstanding, the company would be lucky if other Chief Officers, required to retire upon reaching retirement age and not offered fixed term contracts would not seek redress for violation of their Fundamental Rights. The Board of Directors consist of eight members. Notwithstanding the new CCO’s vast experience, a majority of Board members, meaning five or more saw it fit to vote against the appointment. The appointment was made due to divine intervention by powers that be as a result of heavy canvassing and influence peddling, which is the objectionable aspect.

    The other points raised are best left for the discerning readers to judge.

    I trust the above would be a further Eye Opener for the concerned yet informed citizen.

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    Vishvajit & Ex UL staff: Thank you for the response. Re. “Rama”, in my opinion, not such an “impressive” career record to “Resurrect” an ailing Airline like Sri Lankan. No doubt, he has got exposure to the industry;mostly by being a “drifter”; but this airline needs a very aggressive “Brain Stormer” who can “Revolutionize” the whole set up of the Commercial Division to meet the challenges in today’s aviation industry. I do not know the reasons for the objections shown by some members of the Board; but having read his profile, I too agree that he is not fitting to the shoes at this point of time. I, knowing very well the “Massive” burden that this State Institution has placed and still continuing, on the National Economy; feel, the Authorities must look for a “tough talking; straight shooting” caliber of Lee Iacocca who “Revolutionized” and “Resurrected” the USA Chrysler car company from the brink of extinction. In this instance too, I suspect and smell a rat of “political bungling” in the selection of persons to hold high profile positions. Thank you all.

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    Rajeeva,

    Appreciate your making an exception with this regard and replying to my post. However I do find it strange that you would go so far as to claim the facts I have stated are distorted, we are obliged to hear your view regarding same in the response above.

    Once again, you have successfully displayed you vast knowledge on the aviation industry. Accepted that not very many are well versed in the nature of bilateral agreements between airlines and the variety of which may be entered into. The “eye opener” here however is that while your facts are quite descriptive and educational, it appears there is a lack of awareness with regard to one world alliance norms.

    All 15 one world alliance members are signatories to the RAA (Revenue Apportionment Agreement), accordingly any partner airline (AA included) by default agree to apportionment of revenue on SRP basis (Straight Rate Prorate) as per same, revenue is shared between participating airlines on the basis of respective prorates (directly linked to the proportion of distance or mileage covered by respective airline). In simple terms, Flying from Colombo to New York on UL and AA services via Frankfurt (Assume Frankfurt to New York is 60% of the total distance flown)accordingly AA gets 60% of the fare component (approx.).

    There does however exist the possibility of entering into SPA with partner airlines, which would be valid over and above the RAA. Under these terms any RBD without an agreed upon fixed prorate would revert to SRP as per RAA and therefore it would be highly likely that SPA agreements if entered into would be comprehensive.

    Further, perhaps you are not aware but as of yet not all fares from Colombo to USA/ Canada etc. are not available on GDS. If I’m not mistaken, the reason for such is quite technical and involves the ability or lack thereof being able to price such fares on system. Therefore in such situations only code share fares can be filed, and surely with your knowledge of inter-airline agreements, you are aware that code shares are generally across few destinations only.

    With regard to ability to offer competitive fares, as per my knowledge revenue management systems in airlines are in place to allocate due availability or access based on revenue. Therefore 6th freedom traffic would gain access in the instance where overall revenue to the airline was in excess of the prevailing demand for 3rd and 4th freedom traffic. Regardless to say, there could be interventions on availability as clearly adopted by carriers such as QR and EK when required.

    Further to your indication that past Chief officers had to retire upon reaching the “age of retirement”, it is highly likely that said employees would have been employees under permanent cadre. Besides, there is no reason to doubt said individuals would not have been eligible to apply for reappointment under fixed term contracts. Perhaps the individuals hired for the senior posts do not meet the required experience in your eyes and others too. However, what is to dispute the possibility that these individuals were in fact the most suitable from the pool of applicants? With regard to voting occurring at Board level, sadly while I do possess knowledge of the industry I am not privy to specifics within the airline itself. But surely reading up on past articles and discussions on this forum alone have indicated the previous pro-tem CEO (Current board member) was of the view that he should remain as such permanently and his ability to sway other members in his favor is a question.

    Airline technicality aside, it is very amusing how you completely chose to avoid the comments I have made with regard to your “very experienced former CEO”, perhaps you were not aware of his involvement in the structural changes that you have strongly spoken against. In any case perhaps a reader with more real time company level information can shed some light on the subject.

    Sincerely hope all reading this post found this discussion enlightening.

    Perhaps it is critical views like yours; while potentially biased given your cloudy history with the airline, would encourage management of the national carrier to make tough decisions.

    for One wrong can never undo another !

    now Rajeeva, perhaps your eyes too have been opened…

    A concerned yet informed citizen

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    To all interested in the national carrier operating European routes or potentially discontinuing.

    There is a fine line that perhaps needs to be drawn by the GoSL, what is the present importance of increasing tourism in Sri Lanka.

    Being in the tourism industry, I can confirm that several Big Wigs of major hotel management companies in the country are very concerned of Srilankan discontinuing routes. several have directly approached the PM and President himself on this matter. Reason being, there is a massive probability that tourist arrivals will be significantly affected.

    The common misconception appears to be that in general people assume, there are several Middle Eastern carriers operating, charging lower fares. However, never forget that Srilankan is the only dedicated direct operator from these European Destinations.

    The main argument has been airlines like QR, EY, EK have high frequency of flights into and out of Colombo. There are however more factors that affect travel to and from Colombo.
    * Passengers flying on these carriers need to disembark at either Doha/ Abu Dhabi/ Dubai and connect to an onward flight to Europe.

    * The connecting flight from this point o Europe is open to all of the airlines other destinations (Not solely passengers from Colombo).

    Basically assume QR (Qatar) can carry 400 passengers a day from Colombo to Doha.

    Can carry 700 passengers a day from Doha to Frankfurt.

    QR has over 50 destinations in South east Asia alone, therefore Colombo is competing with 50 other origins to get the 700 seats to Frankfurt for the day.

    effectively that’s less that 25 seats {700/50 = 14) (considering location)per day that origin Colombo passenger would get.

    same applies for other carriers and thus an optimistic view would suggest 60 seats available a day from QR, EK & EY combined.

    Now bear in mind, Srilankan operates a daily flight. 280+ seats, carriage beyond these points is potentially 10% therefore at least 245+ seats per a day for passengers between Colombo and Frankfurt.

    If Srilnakan were to stop this route, the current (245+60) 305 seats available for travel drops to only 60 per day.

    Needless to say, this would result in massive increase in fare due to low supply.

    This would impact tourism, hotel occupancy and the multiplier effect on suppliers and any industries families reliant on this business.

    So then, the question lies can the national carrier be looked at as a solely profit oriented company. Is it not really a service provider for the nation in terms of tourism generation/ foreign exchange/ FDI and most importantly global accessibility.

    If service is considered (As a developing nation, it may well be the main focus) should not the investment in the airline be seen as the facilitation for development and tourism growth.

    food for thought….

    A concerned yet informed citizen

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      Concerned yet informed citizen

      From a Travel Industry perspective you arguments may hold some validity.Nevertheless the Industry per se does not bear the cost of bankrolling the ailing and faltering Airline but the people of this country.For how long should the people suffer just to satisfy a segement of the Economy whilst if the money to be spent on SriLankan is to be used on other infrastructure development of the country the nation will benefit at large.

      This is exactly why the issue of getting the right people with proper credentials and proven track records to manage this Airline has risen and being discussed/debated on this forum.By any token the appointments being talked about do not meet the need of the hour but of few interested Individuals.They may very well depart once their fixed Term is ended with a healthy Bank Balance but would leave the Airline and the nation poorer

      The tragedy of the Airline continues.

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    It seems that Sri Lanka Inc. cannot find a suitable person to be the Chairman or CEO of Sri Lankan to run the Company as a viable enterprise.

    Isn’t there a person or entity in Sri Lanka or overseas who would take up this challenge to lead the Organization and manage resources of the Company to achieve break-even, on the basis of “Payment for Performance”?

    The challenge to any professional is not a question about his/her competence or capacity but his resolve to forego all perks and trappings to lead the whole team to safeguard the organization and sustain the enterprise.

    At that point better to reward that person with so called “trappings” like free tickets and what not?

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    Dear Mr Jayaweera- I agree with you for most of the issues that you have raised. I wonder whether the poor airline is fast becoming a “HOME FOR THE AGED ” above 60 yrs.While the Chairman and the Board members are all honorable people it is not the same with the Senior Management. CEO is not fit to run a debt ridden and fast sinking organization. He should be a person with proven track record of international fame who had saved collapsing companies. CCO too is not a person with proven track record. If my memory is correct he worked for many airlines jumping from one to another and finally landed in SL to earn a fast buck and get vanished. He neither has educational nor top level management experience in much broader angel. Is this what big talking PM doing by appointing unqualified people of his baby boy clan. It will be the masses and the airline that will suffer finally. Good luck

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    Every one is just going round and round blaming each other, the over sixty joy riders and the top level appointees.There is absolutely nothing new is happening, with or without Weliamuna report..Most urgent action and decisions are taking month of Sundays whilst the airline is weeping and bleeding.The bunch of dreadful managers in commercial who got elevated and promoted for friendships are running the company to the ground. The present government, must take faster action without protecting and stonewalling every critical action. By the way if you are anticipating to sell the airline to Qatar airways, who cannot fill their own capacity, you can kiss good bye not only to Sri Lankan airlines but to overall civil Aviation industry in the island.
    All airlines are expanding their network, while we want to pullout rather shamefully, chicken out from our main European destinations,appoint able, dynamic risk taking people who will aggressively take the competition head on.
    One last advice do not let the same mouth and trousers, the old expired airline gurus give you these self destructive ideas.

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    Concerned yet informed citizen

    Since you claim to be from the tourism industry, why don’t you ask some of these big wigs of hotel management companies if they can get their travel agents to sign agreements to use UL for their customers and give us some feedback?

    There is a maximum additional price any person would pay for benefit of a direct flight. The moment that price is exceeded, passengers will put up with a transit stop for a few hours. Consider a family of 4 having to pay Euro 750 from Frankfurt to Colombo and back with Srilankan and Euro 650 with Qatar, Emirates or any other. If they fly a Middle Eastern carrier, they will save Euro 400 which might be the same amount as their spending money during their holiday. As a matter of interest, how many additional Euros would you pay for a direct flight assuming you are not wheelchair bound?

    Your example of Qatar Airlines is way off the mark. Tourism Authority statistics refer to Arrivals from Germany and not Frankfurt which is only one city. You have forgotten other cities in Germany such as Dusseldorf, Belin, Munich, Hamburg, Hannover. Qatar Airways operate to Munich (twice daily), tp Berlin (daily) and to Frankfurt (twice daily) out of Doha. The monthly deployed capacity amounts to 9,150 seats to Berlin, 18,240 seats to Munich and 16,980 seats to Frankfurt. It makes a mammoth 532,440 one way seats to Germany, annually. QR also operates three daily flights between Colombo and Doha. Connecting time to all flights to and from Berlin is between 1 and 2.5 hours. If QR allocates 15 seats in each flight (leaving the over 250 seats in each flight for sales by rest of the chain), it makes 75 seats a day, 2250 seats a month and 27,000 seats a year o Germany to compete with UL’s 3 flights a week to Frankfurt which is 855 seats a week, 3,420 seats a month and 41,040 seats annually. If you add the capacity of other carriers such as Emirates (much higher than of QR due to their A380 operations between Dubai and German points), Etihad, Oman Air and Turkish Airlines to that of QR, UL’s 41,040 seats annually amounts to much less than 50% of capacity. With Middle Eastern carriers controlling over 50% of capacity, it is they and not UL who sets the fare trends. UL will issue high fares and then resort to special fares to match competition.

    If UL withdraws, resulting in ‘massive increase in fare due to low supply’ by Middle Eastern carriers as you say, the Charter companies will step in. Charters have withdrawn from Sri Lanka solely due to Middle Eastern carriers.
    UL has been losing money heavily in European routes even after operating 3 – 4 flights weekly except to London. Do you seriously think they will make money by operating daily flights to these destinations as you suggest? To compete, UL has to operate to other cities in UK, France, Germany and Italy besides other countries. However, it must first start functioning as a business oriented professional airline managed by professionals and not a Board made up mostly of geriatrics having to seek permission from their Minister and Prime Minister even on mundane issues. If not, they cannot play with the big boys. UL is not in the same league.

    Your optimistic theory of ‘60 seats available a day QR, EK and EY combined’ is not correct.

    If you live in Berlin or Munich, would you fly QR with a stop in Doha or with UL by taking a train from Berlin or Munich to Frankfurt carrying all your bags with you, load them on to a trolley at Frankfurt Airport Station and walk across with baggage and children to the Airport to fly what you call ‘dedicated, direct operator’? Is UL flight a ‘dedicated flight’ for passengers boarding from Berlin and Munich? Is it not the same for passengers boarding from Manchester, Birmingham, Glasgow, Niece and Milan?

    According to SLTB statistics, Sri Lanka had 115,868 German tourists in 2015. UL’s market share in Germany amounts to around 20%. UL’s withdrawal of three weekly flights will be offset by Middle Eastern carriers increasing capacity.

    In a day and age when most if not all nations outside South Asia have divested their interests in their national carriers and the very term ‘national carrier’ had little or no meaning, to continue to retain an unprofitable airline at tax payers expense is a crime. The solution is to close the airline and open the skies to any carrier who wishes to operate. Tourism will be taken care even without a national carrier, as done in the Maldives.

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      Concerned yet informed Citizen

      This response from Jurassic100 simply states the stark truth and certainly reflects what most of the tax payers of this country would be endorsing as for the future of our so called national carrier.Either manage the Airline professionally or close it down

      I am sure most of the Board Members as well as their political masters know what it means ( DISCE AUT DISCEDE)

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