PAREXIT & FRAEXIT By SriLankan Airlines
By Rajeewa Jayaweera –July 17, 2016
Rajeewa Jayaweera
Following its exit from Rome in May 2016, the national carrier SriLankan Airlines after much vacillation recently announced its decision to exit from Frankfurt and Paris commencing next winter season. London, for reasons best known to decision makers will continue. The reasons attributed to the decision to discontinue flights are supposedly route losses and stiff competition. It is no secret all European routes have been incurring losses during last 37 years. Stiff competition is an understatement. Due to unplanned ad hoc granting of traffic rights by GoSL to foreign carriers, SriLankan Airlines, from around 2005 have been overwhelmed by Middle Eastern carriers in its European markets. The Sub-Committee on Economic Affairs, Prime Minister, Chairman and the Board of Directors, collectively or individually need to be complimented for making this bold decision, even at this late stage for whatever reasons.
Had flights been discontinued in May 2016 rather than November 2016, it would have saved the airline millions of dollars. Months of May, June and September are traditional low revenue months for European routes whereas December, January, February and March enjoy substantially higher revenue. During the Emergency General Meeting held on 16 June 2015, the Chairman did announce a Recovery Plan submitted to GoSL for approval. It is reliably understood the initial plan submitted recommended discontinuation of European routes excluding London. Severn months later, during the Special Shareholders meeting held on January 19, 2016 the Chairman informed shareholders the proposal to discontinue Rome, Paris and Frankfurt routes was still pending GoSL approval.
Stake holders in the leisure industry, notably travel agents and hoteliers have expressed their displeasure over the decision to exit from Paris and Frankfurt. It is their contention the national carrier should continue to operate loss making routes. They still believe in the archaic ‘national carrier’ concept which belongs to a bygone era. Commercially driven modern airlines operate commercially viable routes and short haul routes which feed and contribute to profitability of long haul routes. Promotion of tourism is the responsibility of tourism authorities. Inept tourism promotion authorities are not a justification for carriers, national or otherwise to continue operating routes resulting in the loss of millions of dollars year after year.
The main competitors of SriLankan Airlines in Europe are Middle Eastern carriers with large route networks, several gateways in each European country and multiple frequencies a day. SriLankan Airlines operations out of European stations with its limited network, single gateway in each European country and 3 -4 frequencies per week other than to London, is excessively dependant on its primary destination Colombo and a handful of other destinations such as Maldives, a few South Indian destinations and Bangkok. In most instances, it is necessary to offer these destinations at air fares lower than those to Colombo in order to remain competitive.
Charts given herein, derived from Market Intelligence Data Tapes (MIDT) provides current status on market share. MIDT is a software program which collates segments of reservations of airlines from individual cities / countries to other cities / countries or what is known as City Pairs. They do not include figures of budget carriers and web sales through airlines booking engines. Data is updated periodically and finally after completion of each month. Most carriers, including SriLankan Airlines utilize this analytical tool for gathering of historical data and planning purposes. These figures are not absolute but sufficient for planning and evaluation purposes. Data has been condensed into three categories i.e. Sri Lankan Airlines; Emirates, Qatar Airways, Etihad, Oman Air, Kuwait Airways and Saudia as Middle Eastern Carriers and all other carriers as Other Airlines.
