Rescuing SriLankan
22 January 2017
SriLankan Airlines and its predecessors, Airlanka and Air Ceylon,
have throughout their history had various collaboration arrangements
with reputed international carriers including KLM Royal Dutch Airlines
and Singapore Airlines. More recently, Dubai-based Emirates bought a 40
percent stake in the airline, later increased it to slightly over 43
percent, and assumed management control. Former President Mahinda
Rajapaksa who had appointed his brother-in-law, Nishantha
Wickremasinghe, a professional planter as the Chairman of the
Government-controlled owning company, terminated the arrangement with
Emirates which had turned the airline into profit. This followed a
dispute with the airline’s management over its refusal to bounce
fare-paying business class passengers to make way for members of his
entourage returning home from London. Wickremasinghe was given
executive control of the airline with dire results for the country with
the corruption and debt-ridden airline incurring billions of rupees of
losses that devolved on the taxpayer.
We recount this
history in the context of SriLankan’s efforts to attract a partner to
invest in and run the airline which was discussed in the news media
last week. The recent complaint to the bribery authorities by former
Minister Mahindananda Aluthgamage against Public Enterprise Minister
Kabir Hashim, alleging a payoff in arrangements for the cancellation of
some pending aircraft orders does not warrant examination. But
allegations, however disreputable their sources of origin, must be
properly investigated. Aluthgamage’s track record is not pretty. The
former president, to his credit, has maintained an eloquent silence
(perhaps implying admission) on the rank bad appointment of Nishantha
Wickremasinghe to head SriLankan and continuing him when there was more
than ample reason to get rid of him. Wickremasinghe is currently under
investigation and what will come of it only time will tell. Meanwhile a
lot of hard work needs to be done to revive the national carrier
which, despite its checkered history has time and again served the
nation well.
The invitation for offers to run SriLankan had
attracted nine bids. Three of these have been short listed. A bid by
Gamini Wettasinghe, running an outfit called PeaceAir is one of these.
Wettasinghe called a news conference in Colombo last week where he
alleged that there were efforts to hide his bid and also has spoken of
rigging. The numbers presented at the briefing were undoubtedly
attractive but there was no clear indication where the funds were coming
from. The short listed offers were from TPG (Texas Pacific Group), a
US investment firm with experience in turning around distressed
companies including an airline and a Maldives-based consortium. While
there was some initial interest from some Middle Eastern carriers, this
has apparently tailed off. Hashim indicated at his press conference
that Prime Minister Ranil Wickremesinghe will take a decision on the
short listed offers within the next fortnight and if none of these prove
satisfactory, a three-member cabinet committee which Hashim would
chair with Ministers Sarath Amunugama and Malik Samarawickrema as
members would resume the search for a suitable partner. It is obvious
that the national carrier has to be made viable under the kind of
arrangement that is being sought. The government hasn’t the needed
funds to infuse into the airline to revive it and a partnership
arrangement is imperative.
Getting an established
international airline to help make SriLankan viable would be a
preferred option. When the J.R. Jayewardene government set up Airlanka
to succeed Air Ceylon, he was able to enlist the intervention of Prime
Minister Lee Kwan Yew of Singapore to ensure the assistance of Singapore
Airlines (SIA) to help the new venture. SIA had acquired a global
reputation for excellence and a better partner to help get our new
airline going would have been hard to find. In a world where there are
no free lunches, obviously SIA would have been looking for some
benefits for itself too from the arrangement. Our landing rights to
many destinations worldwide was solid capital the national airline
could offer its partners. For whatever reason, the partnership with SIA
did not last as long as desirable. But Airlanka did become a modern
airline acquiring skills and technology this country lacked with
immense benefits both for the country and its people. One example was
the fact that we had an airline of our own to fly passengers here when
many international carriers stopped calling at Katunayake post July1983
when the country’s image was blackened worldwide by communal rioting.
Also, Lankans were able to get foreign airline jobs with skills and
experience gathered at Airlanka.
The shoddy manner and the
reason for which our arrangement with Emirates was terminated would
obviously make most international airlines think more than twice about
striking a partnership with SriLankan. It can of course be argued that
if there is money to be made and advantages to be had, commercial
enterprises will look at deals however bad somebody’s (or a country’s)
track record might be. Let us hope that a suitable arrangement where
the majority stake of the airline will remain at home can be made with a
reputable party with the financial and management muscle to make a go
of the business. Apart from landing rights, Sri Lanka’s geographical
location is an advantage in this regard. The quicker a deal is struck,
the better because the continuing hemorrhage is totally unaffordable.
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