When people hear the name Sri Lankan Airlines, they are reminded of another loss-making and corruption-ridden institutional structure. The country’s airline service, operated by both government and private investors, has only bitter experiences.
The previous government also decided to sell the institution to a private investor. However, the decision was not implemented due to protests. Similarly, with the current government coming to power, the decision to sell the airline was cancelled. The government has decided to maintain Sri Lankan Airlines under the Ministry of Finance, Planning, and Economic Development by gazetting under the President.
A loss of Rs. 594.4 billion
Sri Lankan Airlines is an institution that brings pride to all Sri Lankans. However, it has become a dream due to irregular decisions during previous administrations. It should also be mentioned that airline officials’ activities have contributed to this failure. However, the government believes that Sri Lankan Airlines should be controlled by the government.
According to Sri Lankan Airlines Chairman Sarath Ganegoda, measures have already been taken to formalise the institution. Issues such as aircraft shortages, a lack of spare parts for aircraft, staff shortages, and a lack of experienced staff can be identified as reasons for the airline’s collapse. Frequent delays in Sri Lankan flights are a serious problem.
Due to weak management processes, the airline has been labelled a white elephant. Sri Lankan Airlines has now incurred a loss of Rs. 594.4 billion as a loss-making institution. According to Ministry of Finance reports, the airline’s loss for just the 2022/2023 financial year is Rs. 71,307 million.
Insufficient number of aircraft – 8 out of 24 are defunct
The National Audit Office indicates that Sri Lankan Airlines requires 27 aircraft according to its needs assessment. However, the airline currently has to provide all services with 24 aircraft. Of these, eight aircraft are in non-operational condition. The company says these aircraft have been non-operational since April 2023.
However, lease payments still have to be made for these grounded aircraft. The lease amount paid for this from 2021 to 2023 alone is Rs. 5,646.76 million. This situation has become a major obstacle to flight planning. The National Audit Office points out that the company’s fixed and current assets have been valued at Rs. 40,104.8 million. The value of current assets is Rs. 3,210.4 million. The value of fixed assets is Rs. 36,894.4 million.
A revelation about tender fraud
The company has also lost US$460,803 in rental income from two duty-free shops. The National Audit Office points out that this situation has arisen because the correct percentage of passenger movement was not applied when collecting rental income. Although monthly passenger numbers have increased to 684,452, the reduction of the rental rate to 60 percent since April 2023 needs to be examined.
Under these conditions, rental income has fallen by ten percent, amounting to US$91,445. Furthermore, fraudulent activities have been revealed regarding the tender for leasing two shops in the duty-free shopping complex at Bandaranaike International Airport, Katunayake. A tender worth millions of dollars has been awarded to an Indian company.
Mattala Airport becoming a white elephant
Similarly, Mattala Mahinda Rajapaksa Airport is also a massive loss-making white elephant. It was also used for storing rice during one administration period. The airport’s construction was done with a US$190 million loan from China. Now, public funds have to be used to pay off this loan.
Accordingly, Rs. 1,590 million has to be paid annually as loan interest. Mattala Airport’s monthly loss exceeds Rs. 10 million. The National Audit Office points out that its expenses have increased by eight times compared to income. In 2023, its operational expenses alone were Rs. 2,412.9 million.
Income was Rs. 288 million. The Audit Office has also indicated that Mattala Rajapaksa Airport recorded a loss of Rs. 2,124.1 million in 2023. Mattala Airport has recorded a net loss over the six years from 2018-2023, amounting to Rs. 38,489 million. The expected annual passenger capacity of this airport is one million. However, the number of passengers travelling through this airport over the past six years has been minimal, with only 2,182 flights operating between 2018 and 2023.
No income for 6 years
Meanwhile, the previous government had decided to transfer Mattala Airport to an Indian and Russian affiliated company for 30 years. Although the relevant agreement has not been signed yet, the new government’s response has not been expressed so far. Meanwhile, Ratmalana International Airport is also continuously loss-making. Its loss for 2018-2023 is Rs. 2,608 million. Similarly, Batticaloa International Airport has not generated any income during 2018-2023, and has incurred a loss of Rs. 86.6 million.
An unbearable burden on the people
Thus, it is clear that Sri Lankan Airlines has become an unbearable burden for the country. Therefore, this situation needs to be changed and transformed into an advanced institution that contributes to the country’s development. A country’s national airline is an institutional structure that brings pride. However, what exists in Sri Lanka is an airline that faces increasing criticism daily.
Therefore, the airline receiving criticism should immediately be transformed into a prestigious institutional structure. It is good that the current government has decided to maintain it as a state institution. However, if it continues to operate as a loss-making institution under state ownership, that is not what people expect. Therefore, it should be remembered that it is also the current government’s responsibility to clarify how Sri Lankan Airlines will be transformed into a more advanced institutional structure that will contribute to the country’s development under state operation.
