18 September, 2018

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Sri Lankan Airlines: Over Rs. 712 Million Duty Free Total Loss In Last Three Years & Still Continues

A group of airline professionals have confirmed that the loss Sri Lankan Airlines has incurred due to the ‘fraudulent’ duty free deal signed between the airline and its supplier Phoenix Duty Free Services exceeds way over Rs 712 million as opposed to the findings as highlighted by the Board of Inquiry into the misappropriations of the airline and headed by Lawyer J.C. Weliamuna and his team.

SriLankan airlineThe panel headed by anti-corruption advocate and senior lawyer J. C. Weliamuna has said; “There is a major difference in the original draft agreement forwarded by M/S Phoenix when compared with the agreement SLA actually signed with M/S Phoenix. This difference caused a significant loss of revenue that SLA would otherwise have received”.

However a group of airline professionals who wished to remain anonymous revealed that the besides the contract being amended in 2013 to write off over US $ 2.5 million in the first three years of its operation, the airline failed to factor the fuel cost to carry the weight of duty free on board.

On the 14th of April 2015 ‘Colombo Telegraph’ exposed part of that loss pertaining to a sum of US $ 2,596,398 or Rs. 338 million in its story titled “Sri Lankan Airlines Rs 338 Million Fraud: In Flight Duty Free ‘Day Light Robbery’ Still Continues”.

The Board of Inquiry revealed in their concluded report that the Sri Lankan Airlines had also lost out a monumental amount of US $ 1.8 million as well in the first two years since the operation began due to the formula that the guaranteed payments were worked out.

This is due to the fact that the initial agreement forwarded by Phoenix Duty Free Services to Sri Lankan Airlines stated a fixed rate to be paid to the airline. This as explained in Weliamuna’s report was subsequently changed to an agreement which was signed highlighting that US cents .84 would be paid per passenger carried in the initial year and increased every year to reach US $ 1.03 in its fifth year.

“With the third year now concluded and with an average percentage of that figure taken, it could correctly be said that a sum totaling approximately US$ 2.7 million plus the writing off of the earlier reported sum of US $ 2.596, 198, totals to a gigantic figure in the region of US $ 5.2 million or Rs 712 million in its first three years of operation” the Airline professionals told Colombo Telegraph.

According to them, the carriage of the said duty free and the subsequent fuel burn had not been taken into consideration by the airline and that figure of carrying nearly half a ton of the duty free weight inclusive of several carts and air larders on long haul sectors alone.

The national airline operates over 1440 flights per month and the time the airline’s fleet of aircraft spends in the sky burning this excessive fuel for the carriage of such duty free goods makes the airline incur such a severe cost that rightfully it would nullify any profit margins if ever there was.

According to an Engineer of the Sri Lankan Airlines it is estimated that on a single trip from Colombo to London and back, a colossal amount of fuel is required to burn off the 500 kilos of duty free that needs to be transported on a 22 hour round trip.

“The airline should have taken this fact into consideration when deciding on the guaranteed payment Phoenix Duty Free Services had to pay the airline, as not calculating this vital piece of information means that with the fluctuation of fuel prices the national carrier has now incurred a loss even before this operation ever began” said the qualified Engineer who is barred from speaking to the media.

The former CEO Kapila Chandrasena in his annual report for the year ending 2012/2013 highlighted the fact that the airline saved millions by removing the flight deck manuals and introducing iPads in the cockpit instead. The weight of those manuals is minimal compared to the weight of the full length carts and containers that carry duty free goods on board.

‘Colombo Telegraph’ reliably learns that the deal on the part of the airline’s duty free supplier Phoenix Duty Free Services has also violated basic agreements it had signed into with Sri Lankan Airlines.

“What baffles many is as to why even after the revelations of Lawyer Weliamuna and his team, the loss making national carrier has not suspended its contract with the duty free supplier Phoenix Duty Free Services as it continues to be robbed in broad daylight.” a member of the Pilots’ guild told Colombo Telegraph.

The panel headed by anti-corruption advocate and senior lawyer J. C. Weliamuna has observed that in September/October 2011, M/S Phoenix approached the former Chairman Nishantha Wickramasinghe and the former CEO, Kapila Chandrasena, and submitted a proposal to outsource the Duty Free Services at SLA to M/S Phoenix. The BoI also noted that the Srilankan airlines has never contracted with M/S Phoenix before.

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Latest comments

  • 27
    0

    Shame. It looks like apes from another planet has managed Airlanka.

  • 12
    0

    RE: Sri Lankan Airlines: Over Rs. 712 Million Duty Free Total Loss In Last Three Years & Still Continues

    So the perks with Air Hostesses and Free Houses plaws in comparison.

    “According to an Engineer of the Sri Lankan Airlines it is estimated that on a single trip from Colombo to London and back, a colossal amount of fuel is required to burn off the 500 kilos of duty free that needs to be transported on a 22 hour round trip.”

    Need to go after big Fish.

    Looks like nobody is accountable! There is no fear to rob and steal!

  • 12
    18

    Since of late Colombo Telegraph has begun running this kind of investigative stories without any ownership. I do not know whether it has not occurred to the editors that interested parties may be using the web-site to settle scores or slander enemies. The hurt party in such stories invariably will not or cannot respond in the same manner. But their reputation is tarnished forever.
    Although CT has done a lot of good by standing up to the MR regime in the past, I am sad to see it now becoming a mud swinger. All these stories have two sides. The report gives only one side. One time the CT went to the extent of attacking a serving pilot on some shop lifting offence which had happened about 30 years ago. I believe these stories only reflect a lack of maturity and even responsibility on the part of the CT editorial team.

    • 13
      1

      Manjula F,

      Shoplifting done thirty years ago is also shop lifting. That shows the level of integrity of the person. According to your Logic MR in another thirty years is a Saint. What Bullshit? Such people have no credentials to hold Public Office ever. That is it.

    • 13
      1

      Manjula Fernando,

      CO is quoting extracts of the Welimune report on air Lanka in instalments. Nothing wrong about it. Facts are stubborn though it may not be to the liking of many who adore MR & Co. Corruption has become a worst menace in this country and every possible avenue should be explored to expose these criminals and happy CO is doing that.

    • 2
      2

      This news report is very bias & current board of director and acting CEO Srilankan trying to get this Duty Free business ( his background will prove that) and put current supplier down. He also given wrong facts & figures to weliamuna investigation. This is all one side story. CT Editor please make sure authenticity of the report.
      Truth will come out soon.

  • 15
    1

    Sri Lankan Airlines: Over Rs. 712 Million Duty Free Total Loss In Last Three Years & Still Continues

    Facts and figures are coming out from Day 1. But where are the actions on the culprits. Actions are ZERO.

  • 9
    0

    Over the years SriLankan Airlines have appointed department heads not on merit but on other criteria. There is one who became a department head for taking leave to canvass for Sajin Vass in Ambalangoda during the last parliamentary election. Another became by supplying women to world famous womanizer Nishantha and the HHR was another kukula appointed by Nishantha for other reasons.Then comes the Head of security a Gota catcher so the list goes on and on… How will a company that is eating colossal amount of public tax money will ever turnaround with heads of such caliber?

  • 9
    2

    Lets look at the larger issues.

    Sri Lankan lost Rs 100 bn during 2010-2014 and a further Rs 20 bn during yer ended 31 March 2015. The loss for April 2015 is expected be Rs 2 bn.

    Duty free loss is less than 1% of the loss suffered during the last 5 years.

    Let’s catch the big fish!!!

  • 13
    0

    See what these bunch of crooks of Rajapakse Connection have done to Sri Lankan Arilines. Millions and Billlions swindled away in the name of managing. Disgraced the name of the organization to such an extent, no person with a self respect would like to work as a Air Hostess in here. When a person sees SAL uniform wearing staff we get a hated feeling which is so hard to control, yet we know many of them are innocent. Who is to be blamed? Nishantha W. NAMAL R , Kapila C? How they ruined this once respected and glamorous organization with a thick coat of Slut- Tart – Whore paint hard to remove. How to salvage the name of this organization?

    • 7
      1

      even though it is true that Mafia family destroyed Srilankan and it’s name , Air lanka female staff didn’t have a good reputation to start with , majority of the female staff members were either divorced or separated , most of them were having extra marital affairs and it was quite ok within their circles to have such affairs !the nature of the job itself is completely different to other 9-5 office jobs , constant exposure to western culture , limitless freedom out side SL , long 12 hour shifts away from home , a fat pay cheque etc all these factors have been contributed to the gradual deterioration of their family lives.

      PS : As for male counterpart , it doesn’t really matter whether it’s srilankan or CTB , place is irrelevant for us .

  • 8
    9

    Ranil/sirisena gang should not forget the fiasco, how Air Lanka became Sri Lankan airlines! This Emirates deal is the most corrupt deal ever recorded in Sri Lanka, reportedly CBK took about US $200 million as commission alone. How the hell this stupid, double faced, mean Ranil forgot this corrupt deal !!!! how this idiot forgot that this deal was signed and sealed in secrecy without the cabinet approval, even without the knowledge of the chairman and the minister. Worst is that, after CBK sell the airline, government purchased 6 aircrafts and hand over to Emirates for free. When BOI panel going to interrogate CBK about this corrupt deal !!

    Ranil the hero made some noise in the parliament about this deal, then CBK blackmail and threaten him saying she will release the Batalanda report, then this hero tucked his tail between the legs and lived like nothing happened.

    This is just a another episode of this political drama, hopefully it will come to an end soon.

    • 7
      1

      That’s the only time Sri Lankan made a profit and it was a win-win situation on the back of Emirates.

      We had excellent staff training, managed to upgrade our fleet and super connections through EK.

      Do you really think we have the right professionals to successfully manage an international airline ? Get your facts right.

    • 4
      0

      if so , why didn’t Mafia administration highlight all those alleged underhand dealings and prosecute who ever responsible ? as for Batalanda , why didn’t king kakille release that Batalanda report ? may be that file also included in that MR’s infamous hidden ” pile” collection ? is it ? during Emirates tenure Srilankan Airline had started to show some profits , but soon after Mafia family took over , what has happened ? how many Billions of tax payer money been wasted ? thanks to School drop out Chairman , Srilankan has become a white Elephant over night , that’s food for thought !

    • 2
      0

      you are exaggerating a lot in here and even getting 200M rupees at that time and forget $200M is just nonsence.

      Then again, do you happens to know that the profit earning UL with Emirates management with Peter Hill on the helm was sent backing by the rogue King because the management refused his request of 20+ business and first class seatings for his entourage.

      Doing so will have to let some of the passengers that was to check-in is to be removed and let this bunch of rogues seated instad of.

  • 6
    9

    “Colombo Telegraph” hope you will refresh the memories by publishing Air Lanka / Emirates deal. If It’s possible send a copy to Sirisena, Ranil and CBK. Seems like everybody need a shot in the arm.

    • 0
      4

      I am wondering over the mentality of the two mutts who have clicked on the ‘THUMBS DOWN” whats wrong in saying sending a copy to Ranil ,maithree and cbk?

      • 9
        0

        Abu Mukaram

        why are you getting upset? People are entitled to express their views. Are you are aware people are enjoying much freedom these days under the present rule unlike a few months ago under previous regime.

    • 12
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      Sadith

      Whatever you may say about Emirates, during their time of management Air Lanka was showing profit until their management agreement was cancelled by MR for Whatever flimsy reason. You can see the loss accumulated since then which has reached a staggering Rs.120 billion.
      Was this loss incurred to subsidise the citizens of this country but to allow few people to have fun. How can you justify? Be rational and accept the damage caused to this country’s economy by few guys.

      • 2
        4

        During that period profit was “shown” on the balance books, seems like you guys got confused with facts and figures!! After Emirates took over, part of the Air Lanka’s operating cost were transferred to Emirates balance books, therefore Air Lanka became profitable only on paper. Air Ceylon, Air Lanka or Sri Lankan whatever you called it’s a lost making entity since its inception in 1979, you better add up all these years without crunching numbers to satisfy your confused minded

        CBK brought the country’s economy to the brink of destruction, GDP was -1.5% inflation 20% is this happened because she subsidise the citizens of this country ! who gave Rs.2.0 billion as loans to dirty Harry !

        • 5
          0

          Sadith ,

          “After Emirates took over, part of the Air Lanka’s operating cost were transferred to Emirates balance books, therefore Air Lanka became profitable only on paper. “

          Bottom line is , did the Sri Lankan Tax payers put up with the huge losses which were continuously occurring in Srilankan during the said period ? mind you post 9/11 , all most all the major Air lines started to show profit decline and some of them even went bankrupt . how on earth some one going to justify the wanton loss (Rs 120-130 Billion ) of Tax payer money on Srilankan Air lines under the leadership of NW? aren’t the chairman and it’s board of directors responsible/answerable for this monumental loss ?

          “Air Ceylon, Air Lanka or Sri Lankan whatever you called it’s a lost making entity since its inception in 1979, you better add up all these years without crunching numbers to satisfy your confused minded “

          who has confused/biased mind here ? can you produce the statistics (balance papers) for the period 1979 – 2006 and 2006 – 2015 to do the comparisons ?

          “CBK brought the country’s economy to the brink of destruction, GDP was -1.5% inflation 20% is this happened because she subsidise the citizens of this country ! who gave Rs.2.0 billion as loans to dirty Harry ! “

          are you trying to justify and nullify Mafia Family’s unprecedented corruptions and Nepotism against CBK’s corruptions ? who said CBK wasn’t corrupt ? do you know that Mafia family’s rule is on par with F.Marcos ,Saddam and Gaddafi’s rule , please bear with yahapalnaya for the moment , estimated $5 Billion stolen tax payer money is said to be in off shore banks , can you explain as to why the Mafia family suddenly decided to open a bank of Ceylon branch in Seyshells ?

          • 3
            0

            Srilal

            Some guys like Sadith may be blind to all these corruptions, misuse of power, because they MR supporters.

  • 7
    0

    we should privatise the airline.Then taxpayers need not worry about their money.I cannot see the need to have this airline in government control.

    If you give apes money instead of bananas then that money is gone.We can nationalize the airline again in about 500 years time when hopefully due to evolution the apes would have become more human like.

    • 5
      0

      Shanker

      Well said in the present circumstance.

  • 4
    0

    When Sri Lankan Airlines carried out duty free have they computed the fuel cost? It is making sense that Pheonix duty free does not send all the items in the catalogue in each and every flights. This shows Phoenix really concern about the fuel cost just to carry the items for the sake of carrying. But There are people in Sri Lankan Airlines at the moment insisting that all the items should be available in the flight. What a double standards these people are carrying. I bet these people wants to put the good governance in joepardy. Watch out. I can reveal the names of the person. But CT will not publish. I respect CT in that regard. But in court of law those will be revealed.

  • 1
    1

    I am with amusement to see still the author of article stating that passenger definition change with such a passion. May be author himself has initiated it. I also can see the desperation from the author that duty free contract to be annulled. Why this much interest in the contract Mr. Author. Are you a interested party in the Sri Lankan airlines who is eying the contract?

    I qoute from the Article “What baffles many is as to why even after the revelations of Lawyer Weliamuna and his team, the loss making national carrier has not suspended its contract with the duty free supplier Phoenix Duty Free Services as it continues to be robbed in broad daylight.” a member of the Pilots’ guild told Colombo Telegraph” Why this much interest from Pilot Guild LOL.

    Poor author does not even know the figures. 0.84 really made laugh. I know who you are.

  • 8
    0

    Manjula F

    People like you is the problem in SL. You may have had some gains from the previous Government. Come forward with identity. Perhaps, you also should be investigated for defending corrupt practices. Where on earth was accountability in the previous Government?

  • 3
    0

    Thumpane gamaya
    Well said about the heads of the company. Kakula is a pimp who used to supply girls to chairman and other officials while he also having some taste of it. A little bird told me that now he is into more analysis and advertising where a two married ladies are highly benefitted up the ladder – of course not for love but for perks . Strangely all parties are married with children.

    I don’t know how these kind of characters rogues pimps still survive…

  • 2
    0

    I reliably learn that SLA earned pure net profit of $10.8Million from Phoenix in the last three years. Any body wants to challenge me on this figure.

  • 3
    0

    Dayan Jayathileka – where are you??? No comment? You Shameless bootlicker

  • 2
    1

    The present Minister of Foreign Affairs Mangala Samaraweera is a very close personal friend of the Phoenix duty free owner..and thus it is very unlikely that any investigation by Welimuni or any other investigation would force the cancellation of the contract, as the board of directors of Sri Lankan airlines would be batting for the Minister.

    • 1
      0

      What Foreign Minister to do with aviation minister. People have contacts but does not mean they can do illegal things. Sandhya most probably you are accustom to that and you have covered your mistakes through your contacts. So your experience reveals all. What we have to see whether SLA earn profit of $10.8 Million without having to invest or not put additional burden to tax payer money in the last three years.

  • 1
    0

    PHOENIX DUTY FREE SERVICES…… What are the names behind it?
    Who are they???????????????????

  • 1
    1

    “………………………the loss making national carrier has not yet suspended its contract with the duty free supplier Phoenix……”

    This is surprising – why has the concerned minister NOT given orders to terminate the contract forthwith, and revise it or advertise worldwide for a supplier on terms favourable to the country?

    And, frame charges of corruption against those concerned?

  • 0
    0

    Justice I think you are the interested party in the Srilankan Airlines who wants to get the contract. It is better to verify the facts before commenting. I know you vultures working hard to get this done. I know present CEO is in full swing and he does not care any other than duty free only which is not the core function of the airlines.

  • 0
    0

    According to Myth, Phoenix is a bird,the only one of its kind,that after living five or six centuries in Arabian desert burnt itself on funeral pile and rose from the ashes with renewed youth to live through another cycle!

    Phoenix Duty free services is appropriately named.

    In this instance it is by no means a Myth;It is real!

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