The revelations made by the Board of Inquiry (BOI) appointed on the national carrier SriLankan airlines are startling. The BOI said they found “gross abuse of power” by the then Chairman Nishantha Wickramasinghe, who happened to be the brother-in-law of former President Mahinda Rajapaksa. They also said there hadn’t been any kind of proper “management culture” within the airline.
The corruption in SriLankan has run into billions following the re-fleeting exercise mooted during the previous government despite having more cost-effective alternatives. The airline is already deeply in the red with an operational loss of more than Rs.120 billion and despite being in such dire financial straits, SriLankan had opted for an extravagant re-fleeting exercise costing US$2.3 billion of public money. And on top of that, the BOI says the conduct of the Chairman with his “penchant for young air hostesses” could have damaged the reputation of the airline.
All these findings by the BOI trickle down to one simple question. Does Sri Lanka need a national carrier that gobbles down public money? A couple of years back, we asked the same question in one of our editorials. On top of the airline’s dismal financial record, now it seems that the general public has been maintaining a set of corrupt officials, providing all the more reasons to close the airline down. According to BOI, the salaries of these corrupt SriLankan officials ran into millions with so many other perks.
Many tend to think that it is essential to have a national carrier for national pride. Specially when the head of state visits another country on official matters. If that is the case, it is a thousand times more profitable for the country, if Sri Lanka Air Force can maintain a special state-of-the-art aircraft for the exclusive use for the head of state than having a national carrier that reports humongous losses every year.
If the government finds the closing down of the national carrier too drastic, they at least should try to find a strategic investor who can infuse capital into the airline to resurrect its balance sheet. The lesson learnt from selling a stake of SriLankan to Emirates during CBK’s time could be used to obtain a better deal. But a word of caution—it won’t be easy to find such an investor given the depths of financial obligations the airline currently has.
In the meantime, the government should also appoint a BOI on Mihin Air, another vanity project of the previous regime. The so called budget airline has also been gobbling public money for a few years while stealing profitable routes from SriLankan.
The interim budget of the new government proposed to merge Mihin and SriLankan. But such a move will only further deteriorate the already ailing balance sheet of SriLankan. Therefore, an immediate suspension of all operations of Mihin Air is highly warranted. Subsequently its assets, landing rights, etc. should be sold at least partly to pay off the accumulated losses.
In the case of SriLankan, a timeframe that the airline could make a profit or breakeven seem difficult to project. When asked from the new SriLankan Chairman Ajith Dias, appointed by the new government, he said he was not in a position to say when the airline would make a profit. Hence, there is an urgent need for the new government to take a firm stand over SriLankan despite how painful it is going to be.