24 November, 2020

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Undressing The SriLankan Bride

By Rajeewa Jayaweera

Rajeewa Jayaweera

Rajeewa Jayaweera

According to a circular received by all staff of SriLankan Airlines, based on a recommendation of the Sub-committee on Economic Affairs, the government has decided to handover ground handling activities at Bandaranaike International Airport (BIA) to Airport & Aviation Services Ltd. (AASL), operators of the Colombo and Mattala International Airports. Ground Handling Services, hitherto handled by the national carrier SriLankan Airlines includes handling of Passenger and Cargo related services at the airport for all carriers operating into BIA. Sri Lanka’s different national carriers since independence have held a monopoly in ground handling.

According to the circular, employees of the national carrier currently involved in ground and cargo handling (Terminal, Ramp and Cargo staff amount to around 2,550) along with all assets and liabilities if any in respect of Ground Handling will be transferred to the new company. Employees have been informed, the employment terms and privileges of those transferred will remain unchanged. The new company will be a Joint Venture between AASL and SriLankan Airlines. Whether equity contribution by loss making SriLankan Airlines will be by way of transfer of equipment or include capital infusion is not known. SriLankan Airlines

In a separate development, it is reliably learnt, a delegation from the largest handling agent at Dubai International Airport, DNATA, had visited Colombo last week for discussions with AASL.

With the advent of deregulation in the 1990s, most countries privatized their national carriers and opened up ground handling, engineering and catering operations to private companies. Privatized airlines too were permitted to have their own handling arms thus competing with private handling companies. The resulting competition ensures service levels far superior to those provided by national carriers in a monopolistic environment. In a few countries especially in South Asia, national carriers remained state owned and retained a monopoly in these fields especially ground handling, which is a cash cow.

The national carrier’s net income over expenditure derived from ground handling services also known as Airport Services amounted to USD 38.6 mil in 2015/16 and USD 28.6 mil in 2014/15 which no doubt lessened the impact of negative figures in the carrier’s balance sheet.

As a result of the decision by GoSL, SriLankan Airlines will lose a percentage of its net income, proportionate to the equity holding of AASL in the JV, which is to yet to be announced. Other players may become shareholders at a later date.

The benefit of this exercise to SriLankan Airlines would be the reduction of its staff strength from its current level of around 7,000 to around 4,450.

Yet another possibility is the parcelling out of the engineering division to the private sector.

GoSL has also announced its intention of converting the national carrier into a public-private enterprise. Towards this end, preparation of Request for Proposals (RFP) is currently underway. A 35% reduction in manpower would no doubt be viewed favourably by prospective investors.

However, any serious investor, during the processes of a due diligence would notice the absence of the lucrative ground handling services hitherto enjoyed by the airline. It could result in diminishing both the bid price and sale price of the airline.

A deputy minister recently stated GoSL was in the process of ‘dressing up the bride’ (Sri Lankan Airlines) prior to being given away in marriage. On the contrary, parcelling away ground handling services amounts to undressing the bride prior to being given away in marriage. The bride with lesser attributes would be less attractive to prospective suitors.

SriLankan Airlines is yet to announce its annual report for 2015/16. A loss of USD 120 mil from airline operations is anticipated besides a 3.7% drop in revenue compared to previous year. Based on unaudited figures, the airline in a media release stated “the addition of capacity to the Colombo market by other airlines, accompanied by a dramatic drop in airfares in certain markets, largely contributed to declining revenues. The performance was further impacted by the depreciation in the exchange rate compared to the previous year.” These factors had supposedly negated the substantial advantage resulting from the drastic decrease in fuel prices.

A little over 80% of passengers carried by the national carrier are third and fourth freedom traffic, which is point to point traffic travelling to and from Colombo to / from other destinations. The responsibility for additional capacity in the Colombo market and dramatic drop in air fares to Colombo in certain markets, especially Europe and Middle East lies squarely on the shoulders of the national carrier’s major shareholder, GoSL. This sorry state has arisen due to the lack of a coherent and well thought out national aviation policy and the ad hoc granting of traffic rights based on vested interests and whims and fancies of past and present inept leaders.

Countries such as UAE, Qatar etc. despite their small home markets are governed by competent and dedicated leaders and are able to sustain an open sky policy and yet have airlines able to compete globally with success. Their airlines are professionally managed and are commercially driven.

Sri Lanka on the other hand has its inherent weaknesses such as small market size, backward economy, an extremely price sensitive travelling public, a laid back labour force accustomed to working less than half the year to name a few. These factors are further compounded due to the national carrier not being managed professionally and being politically driven.

The decision to hand over ground handling services to AASL which comes under the purview of the Ministry of Transport & Highways is rumoured to be part of political horse trading.

Our leaders failed to develop a bi-partisan national aviation policy to prepare the country to meet the challenges of deregulation taking place elsewhere in the world, commencing early 1990s. Instead, Sri Lanka continued with the dying concept of a ‘national carrier’ and kept underwriting the carrier’s losses it could ill afford. At the same time, traffic rights to foreign carriers were granted liberally without any consideration of its impact on the national carrier. The two policies were contradictory.

The undercapitalized and poorly managed national carrier was no match to carriers such as Emirates, Qatar Airways and Etihad to name a few.

It is hoped GoSL even at this late juncture will develop a sustainable aviation policy based on what is best for the country. If it is the contention of GoSL Sri Lanka does need an airline, it must necessarily be privately owned with the state as a minority shareholder. Considering the traffic rights already granted, such an airline will need a certain degree of protection, from the state, especially in its formative years. The other alternative would be to have no airline and open our sky to all airlines who wish to operate to this country.

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Latest comments

  • 8
    3

    Rajiva says “….parcelling away ground handling services amounts to ” undressing the bride prior to been given away in marriage..”.Well, whether a bride look more attractive or less attractive in that state depends on a) the eye of the beholder and b) how attractive she looks in her natural state.So your proposition that the bride always has to be dressed is ,to say the least ,highly debatable Mr Jayaweera!!

    • 4
      3

      If the “Bride” is taken in the context of conventional Marriage,your argument may have validity but unfortunately if it relates to SriLankan Airlines,Rajeewa may be correct

  • 3
    1

    It makes a lot of sense to carve out ground handling. Hopefully catering and engineering are carved out and privatized as well. Name of the game is competition and even if it is under govt ownership such services should be subject to competition.

    The loss of Sri Lankan for 2015/16 is just under Rs 20 billion and current monthly losses are around Rs 1 to Rs 1.5 billion!!! Thank god MIHIN is being closed down and staff retrenched. Hope they get a decent pay out.

    Also at last Paris and Frankfurt closed by the end of the year. We need to keep London flying and strengthen India, Middle East and Far East.

    Cannot afford pilots at Rs 2 million per month and stewardesses at Rs 500,000 per month when allowances are added up.

  • 7
    1

    What Mr Jayaweera doesn’t say is that this bride is not a virgin anymore.

    Moreover, who will marry this bride if her past lover’s want to keep a ‘minority interest’.

    No wonder there is no queue forming!

    ps: when the previous lover gets back into power, they might ‘nationalise’ the bride in order to enjoy more screwing, again.

  • 1
    1

    They should stop worrying about the bride, no matter whether she is dressed or undressed.

    Of concern now is where the Grand Daddy’s of Sri Lankan Airlines are taking the country. For Big Daddy Ajith Dias the airline is another Barista outlet. For grand uncle Ratwatte the CEO, dreams are about buying Bombardier aircraft. The list goes on. They are all bombarding the airline for their self serving interests.

  • 2
    0

    Undressing the bride to give to an old wrinkly Arab or Chinese man will further damage the country and the people.With a Rs 9.6 billion annual income,just doing the basic functions of an airline,is simply given out to reduce staff numbers and not to improve standards. For an investor taking the airline sans the ground handling is like taking a down syndrome woman home. For Sri Lankan airline after this move,will have to pay for all their ground handling to someone else,meaning it’s a further hit on the air line. The burning issue with ground handling is the poor service levels nicely mixed with sub standard immigration and CIVIL aviation limitations. If we are to grow this facility there are so many improvements we should have thought about.With a largest economy at the door step we still don’t take Indian Rupees at this airport,but has the highest number of them in transit. Selling is just a plaster job,that will not guarantee a superior service for the customer and not deliver the expectations of the tourist coming to paradise.

  • 0
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    It is the same old JRJ bogus dharmita principles that RW follows. When Dharmista wanted to privatize loss making SOE’s he started with the DCSL..! the governments best cash cow. Today RW is applying the same principle to Sri Lankan.
    What he is saying is F*** the Air line F*** the country come my (Royal)friends I’ve made a kill get your fill.

  • 2
    0

    Rajeeva sold out to Emirates hanging on King’s trouser folds. Now he is back to comp-lain abut Sri Lankan. N one sould take this man seriously.

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