Success Of Emirates & Failure Of SriLankan

By Latheef Farook –SEPTEMBER 8, 2018

Latheef Farook

Around early 1985, when I was working with Dubai based English Language Daily Khaleej Times, there were speculations of Dubai government planning to start an international airline.

Many dismissed it as wishful thinking. However some said it could be made a success story. I asked Mr. Maurice Flanagan, then Manager of Dubai National Air Travel Agency, who later became the founder and General Manager of Emirates Airline.

He confirmed and on 25 March 1985 Emirates Airline was launched with   its inaugural flights to Lahore with Pakistan International Airlines providing two of the airline’s first aircraft on wet-lease.

With $10 million in start-up capital it was required to operate independently of government subsidy. Pakistan International Airlines provided training facilities to Emirates’ cabin crew at its academy. 

Today this is the largest airline in the Middle East, operating over 3,600 flights per week from its hub at Dubai International Airport, to more than 140 cities in 81 countries. From March 2016 to February 2017 Emirates had the longest non-stop commercial flight from Dubai to Auckland.

Emirates operates a mixed fleet of Airbus and Boeing wide-body aircraft and is one of the few airlines to operate an all-wide-body aircraft fleet (while excluding Emirates Executive). As of November 2017, Emirates is the largest Airbus A380 operator with 103 aircraft in service and a further 42 on order. Since its introduction, the Airbus A380 has become an integral part of the Emirates fleet, especially on long-haul high-traffic routes. Emirates is also the world’s largest Boeing 777 operator with 151 aircraft in service.

When emirates airlines was launched, Sri Lankan airline, then Air lanka,  has made remarkable headway as one of the most successful third world airlines .Air Lanka was established as the flag carrier of Sri Lanka once the Sri Lankan government shut down the bankrupt Air Ceylon.

In 1998, the then administration of former President Chandrika Kumaratunga had sold 40 percent of the equity of SriLankan worth US $ 70 million, later increased to 43.6%, and give management to Emirates after it suffered years of losses.

However Emirates exited the airline after 2008 sold their shares to the government. SriLankan Airlines, which made profit of 4.4 billion rupees in 2008, the year in which the management agreement with Emirates Airlines ended, has lost 107 billion rupees since then.

Highlighting the precarious situation of Sri Lankan airlines, Deputy Minister Eran Wickremasinghe said on 24 March 2016, that colossal losses that state-run SriLankan Airlines was made to suffer since ex-President Mahinda Rajapaksa chased away Emirates Airlines, and a questionable aircraft deal, is a national financial crime.

The Rajapaksa administration had cancelled the visa of then Chief Executive Peter Hill because he did not bump enough paying passengers to accommodate a large entourage of former President Mahinda Rajapaksa in a single aircraft, he said.

“The CEO had said ‘We should not offload all these passengers since they are citizens and they are paying passengers where there is a contract’,” Wickramaratne told parliament.

“The next day his visa was cancelled in 2007.”

“From then on it became a loss-making airline. It made colossal losses. Its losses are bigger than the spending on health or education.”

By 2015 accumulated losses of 128 billion rupees, debt of 76 billion rupees (542 million dollars) and a hole in its balance sheet of 74 billion rupees. The hole in the balance sheet would have been bigger if not for capital injections by the Treasury from taxes collected from the people.

SriLankan Airlines had been given 100 million dollars each year to cover losses by the Treasury. SriLankan’s management had then decided to buy A330 and A350 aircraft in a reckless manner, he charged.

The Airbus A350-900s aircraft were made to travel 17 hours at a stretch, when the longest direct flight was about 11 hours.

He said according to documents 780 million dollars in government support was needed in the three years after acquisition. An 80 million dollar deposit had been paid.

“Aviation experts have told us that the lease contract terms are 25 percent more expensive than normal and it needs to be looked into. “The present value of the lease liability over the next 12 years is 1.5 billion US dollars.

“This is a financial crime. We have to investigate this.

According to local media SriLankan Airlines faces closure if tangible and sustainable restructuring cannot be achieved.

Meanwhile, according to Daily Mirror of Friday 7 September 2018, Minister  Champika Ranawaka disclosed that SriLankan had recorded a profit of Rs 80 billion when it was taken over by the government from the Emirates Airlines. Then after, the government established Mihin Air as a regional air service to Sri Lanka, Today the two airlines, have amassed a loss of Rs 200 billion and became liability to the Treasury. Each and every Sri Lankan pays Rs 10,000 per year to cover the cost of the two airlines which has become a curse to the country”.

Now the question is who is responsible for this disaster.

It is worthy to recall that Sri Lanka was an almost developed third world country during its independence in 1948 with political and economic stability, high level of free education, free health services and communal harmony.

It was the time when Dubai was unknown and unheard of. Population was only few thousands and suffered from extreme poverty and illiteracy. There was no school, hospital, electricity or drinking water. Turning to stormy seas for fishing and trade remained their only means of survival.

When the opportunity for development came in the wake of oil wealth  they, rulers and the people, alike grabbed it with both hands and made this desert strip a most modern city state.

Emirates hired people from all over the world irrespective of religion, language, culture or nationality. Those who performed well and contributed to the growth of the airline was promoted while others were sent home.

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