Sri Lanka having defaulted on billions worth foreign debts is renegotiating its obligations with creditors. While President is seeking help of IMF with the knowledge that it’s cash is usually conditional with painful reforms, such as tax hikes, removing consumer subsidies, and privatising or closing underperforming state firms. As part of an IMF bailout of the bankrupt country, dozens of state-owned Sri Lankan companies employing tens of thousands of people could be restructured or closed. Top on the list for reform is the country’s only airline.
Earlier Air Ceylon was Ceylon (now Sri Lanka) first flag carrier airline; thereafter Air Lanka was established as the flag carrier of Sri Lanka once the government shut down the bankrupt Air Ceylon. Then Singapore Premier who was on a state visit was asked by our then President to help in setting up a good national carrier. But, Premier advised against a state-owned national carrier, as there were at that time many other projects beneficial to SriLankan people in hand that needed funds. But the advice was not heeded by our President; later Air Lanka Board of Directors uncovered many causes for lack of profit due to mismanagement. Thereafter with some reforms it was rebranded as SriLankan Airlines.
As profits were still hard to earn, goverment invited Emirates in 1998, who bought a minority stake in the carrier and with it took the management of SriLankan, soon profits began to flow. Regrettably in 2008, then President after the carrier refused outright to bump fare-paying passengers to make room for his family members returning from a jaunt in London; promptly terminated the partnership and sacked the chief executive.
The President thereafter packed SriLankan’s management with his relatives and loyalists, several of whom are now facing corruption charges, and the SriLankan airline has bled cash since. The same leader started a rival state-owned airline named after himself; in itself was a colossal failure. It was eventually merged into SriLankan Airlines, along with its accumulated losses.
Today, SriLankan Airlines with nearly 6,000 staff is the biggest, most expensive of companies to have drained the budget of the country compounding the worst financial crisis in national history. As such
the national carrier cannot continue and now the time is ripe for the government to take corrective action to privatise it.