SriLankan Airlines a perennial rat

SriLankan Airlines (SLA) – the island’s national carrier – is frequently in the news for all the wrong reasons. The beleaguered State-owned airline dominated the headlines of the newspapers for abrupt flight cancellations and delays a few weeks ago. One airplane of SLA had been grounded for three days due to a reported sighting of a rat onboard, causing serious chaos to passengers. These developments are taking place at a time when the efforts are underway to sell 49% of the Government’s stake in the debt-ridden entity.

Meanwhile, the deadline to submit Expressions of Interest with regard to the divestment of the State-run airline has been extended to 22 April from 5 March while the timeline to submit the final bids of eligible investors has been postponed to next August from May. In order to make the carrier attractive for potential bidders, the Government has also decided to take over $ 510 million debt from its balance sheet. Although the authorities have been attempting to find a buyer to get rid of SLA, not many parties have shown interest. The Cabinet has agreed to provide $ 60 to 70 million over the next six months to ease liquidity problems at the airline, with the money going for engine repairs and operational requirements.

Last year, Aviation Minister Nimal Siripala de Silva revealed that maintaining the national carrier costs taxpayers $ 150 million annually. Unfortunately, the general public in this country cannot comprehend that the existence of SLA as a State-owned enterprise has only benefited its privileged employees. Even in 2022, the employees of the airline were given a bonus although it incurred losses. Under the Government ownership, the relatives of political leaders have been appointed to the leadership of the airline. Through such appointments, the political powers at the top ensured that SLA operated to pursue their personal/political agendas with no intention at all to ensure financial viability.

Four years ago, it was revealed that during 2013, Airbus – the European aircraft manufacturer – paid a sum close to $ 17 million to a company registered in Brunei under the wife of a former SLA CEO in order to influence acquiring aircrafts. Such deals highlight how top executives of SOEs enrich themselves while running down the institutions they are responsible to foster. The presence of consistently loss-making SOEs such as SLA is one of the reasons why the country has reached bankruptcy and the masses have been slapped with onerous taxes.

Some ignorant commentators spread the notion that so-called national assets like SLA should not be sold off. Can an enterprise, which has been incurring losses running into billions consistently and squandering people’s money for decades, be recognised as an asset? Financial allocations that were channelled to SLA could have been alternatively spent on valuable areas such as education, health, research and development, and social welfare. There is no rationale whatsoever in spending taxpayers’ money on an enterprise involved in a high-risk business activity requiring massive capital investments regularly.  

Unlike the voters in Sri Lanka who lack economic literacy, people in India have endorsed its Government’s privatisation drive which intends to provide relief to taxpayers. Under the dynamic leadership of Prime Minister Narendra Modi, the BJP-led administration sold India’s national carrier – Air India – to Tata Group in 2021. Prior to the sale, Air India was losing $ 3 million per day on average. In a conference organised by Advocata Institute about two years ago, experts pointed out how Air India had been moving forward under Tata’s ownership through efficient customer care services as well as improved fleet productivity.

SLA is a perennial rat which has been eating taxpayers’ money for decades. If the Government is unable to find a buyer, it would be in the best interest of the country to wind up the airline. What the nation needs is connectivity through air, and that can be easily secured through international airlines.