Resurrecting SriLankan Airlines | Sunday Observer

Resurrecting SriLankan Airlines

14 May, 2023

According to conventional wisdom, a country should have its own national airline. The aim, according to the proponents of this theory, is to project the country’s image in foreign countries and draw more travellers and tourists into the country. But as often said by President Ranil Wickremesinghe, the Government should not be engaged in business because most State-Owned Enterprises (SOEs) are mismanaged and hence loss-making.

Many countries which flaunted their “national airlines” later discovered the horrendous cost of operating a State-owned airline. Among the many examples are British Airways, South African Airlines, Alitalia, Swissair and closer home, Air India. These once-thriving airlines were more or less run to the ground by their Government bosses. Now all these airlines have either been privatised or are in the process of privatisation. Of course, there are a few Government-run airlines that are doing well, including Emirates, Etihad, Qatar Airways and Singapore Airlines. However, the governing model of these entities is different, being more akin to a private enterprise.

In fact, during the few years that Emirates ran SriLankan Airlines, the latter performed remarkably well. But it went into a nosedive the moment Emirates was kicked out by a previous Government over a petty issue and replaced with a sycophantic management that knew next to nothing about running an airline. Today, SriLankan Airlines is a massive drain on the Exchequer. Although for the first time in 15 years, SriLankan Airlines has succeeded in posting an operating profit of Rs. 1.7 billion in FY22 reflecting improvement as against a loss of Rs. 8.12 billion in the previous year, the significant devaluation of the Sri Lanka Rupee in March 2022 resulted in an exchange loss of Rs. 143 billion for the year. This drove the airline to record a full-year net loss of Rs. 164 billion (US$ 525 million) after exchange loss and finance charges as against Rs. 49 .7 billion in FY21. This is a massive loss that a country like Sri Lanka cannot sustain in the long term.

The Government as well as the management of SriLankan agrees that restructuring or privatisation is the only way out for the airline. Though bids have not been called for per se, several key international players are said to be interested in securing a stake in the carrier, given its strong presence in India and the Asian region. Tata, which bagged Air India last year, is said to be among the interested parties and SriLankan would indeed be a great fit for its portfolio. But whoever the ultimate buyer is, there is no question that the airline must be broad-based.

Regardless of restructuring, the airline, which celebrates 25 years under its present name this year, has to think urgently of a fleet renewal program. The airline currently operates a fleet of 24 all-airbus aircraft (12 narrow bodies and 12 wide bodies), though a few of these have been grounded over engine issues. The airline actually does not own any aircraft, preferring to lease them instead. While the airline’s A330-300s are relatively young at around eight years, its A330-200s are rather long in the tooth, at an average 20 years old. These have to be replaced as a matter of priority, possibly with Airbus A350s for long-haul operations such as London, Tokyo and Melbourne.

But the airline should also be looking at the Boeing 787 Series, after studying its route network and any future destinations. For regional operations, the airline should look seriously at the Airbus A220 (formerly the Bombardier CS100) and also the Airbus A321 XLR (EXtra Long Range) which has a range of 8,700 Km with an extra centre fuel tank. Some airframes produced by Embraer, the third player in the airliner business, could also fit into the SriLankan route network. With the current upgrading of domestic airports to international status, the airline should ponder the possibility of having domestic flights as well with a suitable aircraft type. Moreover, Jaffna-Chennai flights could be a potential winner for the airline, which is already the foreign carrier with the highest number of flights to India. In any case, it is time that the airline owned some aircraft, as many airlines of countries that are actually poorer than Sri Lanka have their own planes.

There have been complaints that both technical and in-flight standards of the airline have been slipping in recent years. A technical malfunction grounded a recent Colombo-bound flight from Melbourne for nearly 24 hours and a cabin depressurisation snag hit a Dubai-bound flight, forcing it to turn back to Colombo. A recent bad weather diversion of a Colombo-bound flight to Mattala resulted in passengers having to wait many hours for transport facilities to Colombo and when the buses finally arrived, the irate passengers found that they were normal rickety private buses. The airline must take stock of these happenings and implement remedial measures if it is to remain our pride in the sky.


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