Colombo Telegraph

We Cannot Clap Our Way To The Finish Line

By Sarath De Alwis

Sarath De Alwis

An exuberant media, print and electronic, has acclaimed a fleeting and fragile observation by Master Card , that Colombo is the fastest growing tourist city in the world as a monumental achievement.

One isolated line in a 46 page document- Tracking Global Growth: 2009 -2015 became a retrospective endorsement of Gota’s second war on the urban poor of Colombo.

It is a clear reminder that the media in this country despite their avowed assertion of independence was an acquiescent partner of the Rajapaksa siblings in manufacturing popular consent of post war triumphalism, the myth of the Asian miracle and the Indian Ocean hub of 21st Century global commerce.

The once powerful and now plaintive and powerless Mr. Gotabaya Rajapaksa wasted no time in appropriating the credit for this imaginary accomplishment.

In his face book page, the former defence secretary and the czar of the UDA trumpeted that he was ‘truly delighted’ to see Colombo being recognized as the fastest growing city for tourism in the Global Index of Mater Card whose vision statement is ‘A world beyond Cash ‘.

The former strongman has promised to share his thoughts on Urban Development undertaken by the previous government. In a TV interview, he warned the new government not to squander the developmental success in Colombo by neglecting to maintain the parks, jogging tracks and shopping arcades. The purpose of this article is to dissuade not only the former defense secretary, but also the present heads of Sri Lanka tourism and Sri Lankan airlines from misreading the conclusions and misconstruing the reasoning of the report.

The full report “ Master Card 2015 Global Destination Cities Index” can be accessed here.

Does the survey pronounce Colombo as an exceptionally attractive destination? It does not.

What it. in fact observes, is analytically accurate and revealingly bland. It qualifies its assertion that Colombo is the fastest growing with a CAGR 0f 20.1 percent with the following clarification.

“Colombo in Sri Lanka is the fastest growing with a CAGR of 21.1 percent, albeit coming off a very low base, with just over one million visitors in 2005. Chengdu in the Sichuan Province of China is the second fastest growing, with a CAGR of 20.7 percent. It is also growing from a low base, with about 1.5 million visitors in 2015. [Emphasis mine]

Thus what makes Colombo exceptional is the base year 2009 – the year when the Lions beat the Tigers. The compound annual growth rate is calculated from 2009.

The purpose of the Global City index is not to deliver value judgments on city administration. The report as explained in its introduction charts how 132 of the most important cities in the world are connected through air travel – how many international visitors arrive at each of these cities from other cities; and how much these visitors spend during their visit?

The report does not evaluate the length of the jogging tracks or the square footage of shopping space that Colombo has added since 2009. The report is unequivocal in its prognosis of Colombo. “Colombo in Sri Lanka is the fastest growing destination city among the 132 cities covered by the index at 21.1 percent CAGR between 2009 and 2015. Tourism there is clearly recovering strongly after the ending of the civil war.”

In an article captioned 21st Century Silk Route in Skies: No stop in Serendib, published in the Daily FT of 2nd February 2015, this writer urged the new interim government to seriously consider closing its loss making routes to Europe or even consider shutting down the airline completely. It also said that the government has no business to be in the Airline business.

Sri Lankan Airlines is not a going concern. Its losses on the far eastern sectors are marginally less than its losses on the European routes. Its losses on its Middle Eastern routes are slightly higher than its losses on its operations to the Indian subcontinent. If indeed Colombo has recorded a 21.1 percent increase in visitors, how did they arrive in Colombo? Has Sri Lankan airlines registered a corresponding increase in its cabin factor on any of its routes to tourist generating points?

Fastest Growing Destinations

The Master Card report carries the chart of the fastest growing Destination Cities by International Overnight Visitor [2009- 2015CAGR]. Colombo heads the list and its lead over Osaka and Tokyo explains the distinction Colombo is entitled to and the difference it should not overlook.

It then offers a further clarification in the next chart.- The fastest Growing Destination Cities within the top 20. The report notes that ‘A very different picture emerges in this comparison. Four out of five in this chart are from Asia while Istanbul is from central Europe.

These according to the report are the destination cities that have big enough numbers of international visitors to put them in the top 20 of the world. Then comes the coup de grâce: As for the Asian cities, their strong growth in visitors has come from the massive outbound travel from China.

This report is essential reading for those entrusted with the running of the national carrier and the Tourism development authority by a hands on Prime Minister who does not hesitate to locate the right person for the job even if it means importing the requisite talent.

In the earlier article published on 2nd February in the Daily Ft this writer said “Airlines today are a global business where connectivity is pivotal to their success. The sorry truth is that Sri Lanka in the 21st century cannot remain on the aviation silk route if it persists with its obsession of a national airline engaged in international air transport.”
It is now being whispered that the octogenarian repository of economic wisdom in the policy planning establishment has recommended that the flag carrier withdraws from Europe but retain the same frequencies to the mother country whose Westminster democracy we wish to restore in place of the Gaulist system. Be that as it may, the Master Card report reiterates the conventional wisdom in aviation economics.

“A prerequisite of any destination city that aspires to attract more international visitors is to increase the capacity of airports and frequency of flight connections between the airport and the rest of the world.

Sri Lankan airlines connects to four of them save Istanbul. Can our national carrier , Sri Lankan Airlines agree with the Master card report and claim a discernible improvement of its uplift from these leading hubs?

One noteworthy feature is that Dubai has outpaced Singapore as a global hub.

The report explains “London led the world in 2009, and by 2015 its connectivity score increased by 4.2 points. Paris is second, but its connectivity score has dropped by 1.3 points since 2009. Next is Dubai, increasing its score by an impressive 20.4 points, and surpassing Frankfurt between 2009 and 2015. Frankfurt slipped to fourth, with its score basically unchanged. Rounding out the top five, Istanbul increased its score by 26.0 points, exceeding the growth rate of Dubai. Not surprisingly, Dubai and Istanbul are dynamic destination cities moving rapidly up the ranks.

In February this writer said in the columns of the Daily FT

“Today, Europe regards the Persian Gulf the most easterly hub. For Asia the Gulf is the most westerly hub. In this modern cartography of the 21st Century, Sri Lanka is not in the silk route in the skies. Nobody has noticed how far old Serendib has drifted away from the silk route that linked Europe with Cathay through the straits of Hormuz and the straits of Malacca.
 Neither the Department of Civil Aviation nor the National Carrier have recognised the ‘complex and uneven geographies of mobility’ structured by the airline industry and its profit and efficiency driven selection of routes.”

So much for prophets sans honour in their own village.

The report next deals with the more complex issue of visitor expenditure. This writer gave up a career in journalism to join the leisure industry in 1974. For the last four and a half decades in destination promotion and airline marketing this writer has heard many advocates of upmarket tourism who wish to bring high spending vacationers and promote MICE tourism – meetings, incentives, conventions and exhibitions.

This writer once earned the wrath of one of those pundits who had the habit of starting his homilies with the words “Please correct me if I am wrong.” To my own amazement I heard myself telling him “No boss I can’t do that. It is a full time job! ”

The report has a chart which is given below. It indicates the Global Destinations by overnight visitor arrival expenditure per city resident in 2015. This gauges the performance of a destination city by taking to account the size of the city’s resident population and compares it with the number of international overnight visitors that it attracts per city resident. Cities such as Dubai, Singapore and even Amsterdam are at an advantage in this calibration. Colombo is not in the top 20 but could measure up to the test if we ever get in to the league.

Although the report has excited the former secretary of Defense and Urban development, Colombo is nowhere near the top ten Destination cities in Asia/Pacific. The top ten destinations in its order are Bangkok, Singapore, Kuala Lumpur, Seoul, Hong Kong, Tokyo, Taipei, Shanghai, Mumbai and Osaka.

“Bangkok which was ranked second in the world is the top destination in Asia/Pacific. , displacing Melbourne. In terms of cross-border spending, Seoul leads in Asia/Pacific with an expected US$15.2 billion, followed by Singapore at US$14.7 billion, Bangkok at US$12.4 billion, Kuala Lumpur at US$12.0 billion, and Taipei at US$9.3 billion.”

These figures should tell us where we are in the business of tourism and the more daunting activity of aviation.

The report also contains some fascinating insights in to the developments in aviation industry as regards major leisure destinations – Bangkok, Singapore and Kuala Lumpur. The report graphically shows how each city has tended to develop its feeder networks.

The charts clearly demonstrate that the Asian destination cities have their feeder reservoirs within Asia and Australasia. Europe is incidental to their success.

Our aviation industry and the tourism industry does not wish to confront the truth. Both industries survive on self-deception and self-delusion. Our stewardesses serve free Moët & Chandon while our house maids earn the dollars that pay for them.

The government has no business to remain in the Air Line Business. Sri Lanka cannot afford a flag carrier. It would be cheaper for us to let someone else to paint our flag on their aircraft and pay us a token royalty. The facts are out there with IATA itself. The Airlines, that is to say the lucky ones could at best make less than $6 per passenger. On about $750 billion in revenue, that works out to a possible net profit of just $18 billion. It should work out to be 2.4% profit margin. That is the truth. As the German playwright Wolfgang Borchert says in his theatre of the ruins ‘Outsider’ “Truth is like the town whore. Everybody knows her, but nonetheless, it’s embarrassing to meet her on the street”.

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