Resurrecting SriLankan: Uphill task, since the exit of peter hill

by Jayasri Priyalal-March 8, 2020, 8:43 pm

There are numerous controversies now unravelling in connection with SriLankan Airlines, our treasured national carrier. There have been multiple attempts by policymakers to revive the Airline and run it as a viable business entity. Managing SriLankan Airlines, as a state entity, has been a difficult challenge since its establishment in 1979. Abusing power and privileges, at the higher echelons in the organization, has been the norm since its inceptions. However, a praiseworthy strategic decision was taken in 1998 to privatise the Airline and sell a part of the shares to Emirates Airline, retaining the majority stake of the company with the government of Sri Lanka. Dubai-based Emirates Airline was entrusted with the management of the Airline. Peter Hill, a veteran British Airline expert, was appointed as the CEO of SriLankan Airlines by Emirates Airline covering the operations in Sri Lanka with a complete rebranding.

The strategic partnership with SriLankan Airlines would have contributed immensely to Emirates Airline for its visionary ambitions of converting Dubai as one of the best regional air hubs in the world. Nevertheless, the Government of Sri Lanka, too, benefited from the joint management, where the Airline contributed to the government coffers, by way of LKR 9828 Million as accumulated profits, towards the end of the partnership between Emirates Airline and GOSL, in 2008.

It is heartening to note, from media, that a few patriotic Sri Lankans, with a proven track record in business, have now come forward to resurrect the grossly mismanaged SriLankan Airlines. We need to congratulate Ashok Pathirage, and the new directorate, for accepting the mammoth task of reviving the ailing Airline, that too as an honorary service. On the same note, President Gotabaya Rajapaksa needs commendation for the right choice of the new Chairman, and a board of directors of persons with business acumen and reputation.

A chronicle of misdeeds bestowed on the national flag carrier by the egoistic self-serving policymakers must be narrated, as a good starting point to learn and avoid similar pitfalls for the new SriLankan Airlines management to chalk out a strategic revival plan. The effort needs to recognise as a fact-finding mission to support the turnaround envisaged; to make the Airline a profit-making enterprise.

In this article, the writer aims to collate the facts and analyse them. The essential objective is to strengthen the corporate management to run the national carrier as a state-owned entity with the majority control. National carrier under state ownership is an absolute necessity to promote Sri Lanka as a choice tourist destination in the world. To keep it as a state entity, one must carefully craft limits of state intervention disrupting the Airline's autonomy to function as a viable, efficient, profitable enterprise. In the current era of Asian renaissance, there is vast untapped potential for SriLankan Airlines to realise, provided the Airline is managed with a vision, and appropriate business strategy with a dedicated corporate management team, who is capable of identifying corrupt, wasteful expenses and avoidable expenditures, particularly in debt servicing and capital expenditure, and expend on the essential investment with a clear long-term business plan with minimum intervention of state. As the saying goes, right diagnosis is half of the right solution.

FLOATING A LOTUS BUD TO FLY HIGH IN SKYS

The first national carrier, Air Ceylon, ended its existence as a bankrupt entity, and in 1979 SriLankan Airlines came into operation with the management control with Singapore Airlines. Abuses of privileges and powers of the higher management were rampant even at that stage. And the Airline continued to operate in the red. In 1998, the government decided to privatise the Airline and sold a part of shares to the Emirates Airline with full management control. Emirates operated the Airline profitably, but Sri Lanka could not cash enough out of the deal, yet the country was grappling with eliminating the ruthless LTTE terrorism in the country. SriLankan Airlines lost four of its aircraft, on the runaway when LTTE terrorist attacked the Katunayake airport on 24th July 2001.

In 2007, on one occasion, SriLankan Airlines could not accede to the request of then President Mahinda Rajapaksa's to arrange passage for his 38-member entourage to return to Colombo from London, as the flights were fully booked. Refusal to fly the government delegation was considered an insult, disrepute to the head of the state, as he had to return to Colombo for urgent meetings. This incident may have prompted the government to own a second airline under its total disposal, without realising the past unpleasant experiences of managing airlines profitably.

Floating Mihin Lanka as a budget carrier, with a political aspiration of floating the symbol of the Lotus bud and making it flying high in the sky was conceived. As reported in the media, there was no prior Cabinet approval obtained to commission the Mihin Lanka Airline. Mihin Lanka started its operation with Gotabaya Rajapaksa then Secretary to Ministry of Defence as founder Chairman and the controversial Sajin Vas Gunawardena as the CEO though he had no experience in managing an airline nor any other businesses successfully. Gunawardena was a confidant of Mahinda Rajapaksa and was an influential person, who even took on the Sri Lankan High Commissioner to the UK in the presence of the President, while he was the Coordinating Secretary to President Mahinda Rajapaksa on trade and foreign affairs. However, later Gunawardena was removed as the CEO of Mihin Lanka, and Kapila Chandrasena installed as the CEO. Chandrasena is alleged to have benefited from a questionable Airbus deal.

PERSONA NON-GRATA – PETER HILL EPISODE: END OF EMIRATES PARTNERSHIP

While the idea of floating the second, state-owned budget Mihin Lanka was brewing, Mahinda Rajapaksa declared Peter Hill, the CEO of the SriLankan Airlines, stationed in Sri Lanka, as a persona non-grata. This was a form of displeasure extended to the CEO of the government-owned SriLankan Airlines not granting the request of the head of the state to fly him and a group of others to Colombo. This action resulted in Emirates Airlines terminating the partnership, after 10 years, ending in 2008. After that, the merrymaking at the expense of SriLankan Airlines started with blatant nepotism, corruption and abuse of power and privileges. Finally, when the government of Sri Lanka decided to ground the flying Lotus bud, Mihin Lanka, at the end of 2016, it was reported that the accumulated loss of the Airline, since the inception, was LKR 13 Billion. Nearly, LKR 5 Billion, more than the accumulated profits earned by Sri Lankan Airlines under Emirates management till the end of 2008, which came in handy to the government coffers.

TALEs of TWO NISHANTHAs

Founder Chairman of Mihin Lanka, Gotabaya Rajapaksa, did not officiate for a long time in that position as he stepped out. Few other unqualified persons were taking the helm of the unworthy enterprises; finally, Nishantha Ranatunga took over as Chairman/CEO of Mihin Lanka, in March 2014, from Nishantha Wickramasinghe, who was then promoted as the Chairman of SriLankan Airlines, a planter with no experience in the airline business. Similarly, Kapila Chandrasena, a person with telecommunication background, who was also one time CEO of Mihin Lanka, got promoted as the CEO of SriLankan Airlines. From 2008 to 2015, they mismanaged the Airline's operations with an accumulated loss amounting to LKR 128.8 billion (US$ 875 Million).

In an interview, Nishantha Wickramasinghe demonstrated his planting experience well, stating the Mahinda Rajapaksa International Airport (MRIA) was built in Mattala, enabling the aircraft to land safely avoiding the harsh weather patterns frequently experienced by the pilots as a result of two monsoon seasons in the island. He also expressed hope for the gem merchants from Rathnapura to fly out with their precious stones overseas to market from Mattala airport instead of Katunayake.

Emirates Airlines management was reprimanded for not providing the passage to the head of the state, as the Chairman Nishantha Wickramasinghe instructed the SriLankan Airlines operations to divert an aircraft to Singapore at the cost of US$ 90,000 for his impatience to reach Colombo with a delay of 90 minutes. These facts were revealed before the Presidential Commission, highlighting the deterioration of affairs. The facts and figures enumerated in the essay are not fictions, and they are all available in the public domain for those who want to learn about the misdeeds committed by the unqualified people in power, be it politics or in business. Many of them are quite aware that stupidity is not a crime; hence they keep exploiting state wealth for their personal and private gains.

It is hoped that the misdeeds pointed out in this article will serve as a guide for those who have come forward to revive and resurrect the SriLankan Airlines. All these narrations are facts, highlighted without any ill-feeling towards the personalities involved. Patriotic Sri Lankans need to rally and get used to being hard on the real problems. As Sri Lankans, we should campaign to have the criminals who have ransacked the economy brought to justice. Let these events be proper lessons for the electorate to elect their representatives who are honest and committed to serving the country.

The second part will discuss a new business plan to resurrect SriLankan Airlines as the national carrier.