The future of national carrier

Wednesday, 23 October 2024 00:00 - - {{hitsCtrl.values.hits}}

President Anura Kumara Dissanayake has made a decision to maintain the loss-making SriLankan Airlines (SLA) under State ownership. The previous Government tried to privatise the national carrier, but the plan to dispose had to be abandoned as the bids did not meet the qualifying criteria. Due to the airline being burdened with debt of approximately $ 1.2 billion, not many parties were willing to invest in the carrier.

Last April, six firms expressed interest towards the beleaguered entity, including Hayleys PLC, of which the newly appointed Chairman Sarath Ganegoda is an Executive Director. It is reported that maintaining the national carrier costs taxpayers a colossal sum of $ 150 million annually. Unfortunately, the general public in this country cannot comprehend that the existence of SLA as a State-owned enterprise only benefits its privileged employees.

The fundamental shortcoming of SOEs is that there is no sense of ownership apart from being adversely affected by the acute agency conflict. Boards of directors and key executives of SOEs have no concern whatsoever towards the financial/operational viability of the enterprises they lead as none of them lose anything financially due to the poor performance of the respective entities.

The top NPP Economic Policy Adviser Prof. Anil Jayantha had stated that the national carrier should remain with the State given its significance for the development of tourism. Premier tourist destinations like Australia do not have government-owned airlines. Even the most powerful state in the world – the US – does not even have a national carrier.

The Government could adopt an open skies policy which could be a significant boost to the tourism industry because what the country needs is enhanced connectivity through air and not a so called national airline which incurs losses year after year. SLA has frequently dominated the headlines in the recent past for abrupt flight cancellations and poor customer service. Also, AirlineRatings.com, a top industry site, had downgraded SLA’s safety rating after one of its captains locked his female co-pilot out of the flight deck during a flight from Sydney to Colombo. How such an ill-famed airline could contribute towards the progress of the tourism industry is baffling.

Lack of economic/financial literacy among masses is a huge impediment towards economic reforms. People in Sri Lanka perceive privatisation as a crime. However, citizens worldwide have acknowledged that State operating commercial enterprises is a medieval practice. The BJP-led administration sold Air India to Tata Group in 2021. Prior to the sale, Air India was losing $ 3 million per day on average. Many high-profile international airlines like Qantas and Lufthansa had been transferred to private ownership from State control. When governments all over the globe are withdrawing from running airlines, the peculiar island is ironically moving in the opposite direction.