Mumbai: SriLankan Airlines plans to double the number of flights to India from 50, but it will not undercut competition to woo passengers. In an interview, chairman Nishantha Wickramasinghe also narrates the plan to turn around the airline, which will soon be 95% government-owned. For free tickets and free upgrades, one needs to seek the approval of Sri Lankan President Mahinda Rajapaksa, he said. Edited excerpts:
SriLankan Airlines is turning around. How have you done it?
All credit goes to employees of the airline. You would not be successful unless your workers are acting as one team.
Flight plan: Wickramasinghe, who says Air India can learn more from private airlines in India than from state-owned SriLankan Airlines, says he will not undercut any airline to woo traffic.
What went wrong?
Recession and terrorism. People were just not travelling. The passenger traffic dropped by half. We had planes flying from European destinations with 25% loads. The SARS (Severe Acute Respiratory Syndrome), too, had taken toll on the traffic earlier. Besides, we bore the brunt of terrorism. When people were dying daily, how can anybody travel to Sri Lanka? Other carriers can afford to stop flying or reduce frequency of flying to Sri Lanka, but being the national flag carrier we can’t do this. We had the fullest cooperation from the government.
India’s national carrier, Air India, is state-owned and is making huge losses. What can Air India learn from SriLankan Airlines?
Some of the private carriers of India are doing well, Air India should better learn from them than us.
What is your model airline?
We would ideally want to model SriLankan Airlines on Malaysian Airlines, 100% government-owned. Idris Jala, former managing director and chief executive officer of Malaysia Airlines, had turned around Malaysia Airlines. Now he is a minister. He is my guru. I am also in touch with Tim Clarke (president, Emirates Airline). I am not ashamed to ask these guys. We have nothing to lose.
How important is India for your airline?
India is an important market for us and it constitutes a little over 20% of our revenues. For Indians, it will be cheaper to fly to Colombo compared to domestic or other international tourist destinations. Since the security is relaxed, I see a lot of tourists coming to Colombo. But we will not undercut any airline for wooing traffic.
At present, we have 50 flights to India. We will have to double it shortly. We have tied up IIFA (International Indian Film Academy) to promote the country as a destination. We are also working closely with the Sri Lankan Tourism Board.
You are into other airline-related businesses.
Yes, we have created a holding company that, in turn, will create profit centres, including airlines, cargo, ground handling services, catering, engineering and holidays. These businesses will report to the board of directors.
In the engineering space, SriLankan Airlines had won a year-long contract from IndiGo. (India’s largest low-fare carrier had signed a year-long contract with SriLankan Airlines in 2009 for conducting airframe maintenance checks on 10 of its A320 aircraft.) We would be looking at more such opportunities from India, Pakistan, Malaysia and other countries.
What’s the key challenge for a state-owned airline?
Generally, people feel it’s their own airline and ask for free tickets, free upgrades, etc. You may also find many guys interfering in the management. Fortunately, I have no such pressures. President Mahinda Rajapaksa had clarified that nobody will be interfering in the airline management. Even for an upgrade, people have go to the President for approval. Whoever wants any free tickets will have to talk to him. The President has clarified that the government in no way will be involved in the airline management. The airline will be run by the chairman, the board of directors and its senior management.
Would you need any financial help from the government?
We would need government’s assistance for two-three years but we are not asking for any money. We need only guarantees and underwriting for the loans we take and lease agreements we enter into. This will help us bring the interest cost down.
Emirates, which was holding a sizeable stake and management control, is no more interested in SriLankan Airlines. Will the government buy back Emirates’ stake?
Emirates has a 43.63% stake in SriLankan Airlines with management control, while the government of Sri Lanka holds 51.05%, and employees 5.32%. The government has agreed to buy back shares from Emirates. In a couple of weeks, the government of Sri Lanka would buy back shares from Emirates.
What difference will it make to the airline?
It makes lot of difference. Till now, the government of Sri Lanka was not able to guarantee or underwrite SriLankan Airlines’ lease agreements or loans because the management control is with Emirates. Because of this we could not grow. We are targeting to double our fleet in next three-four years.