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Daytime runway renovation: SriLankan slashes 620 flights
View(s):By Namini Wijedasa
SriLankan Airlines will have to slash a massive 620 flights off its schedule to accommodate the daytime renovation of the airport runway after agencies overrode the carrier’s request for construction to be shifted to night hours.
Earlier, the airline had said more than 200 flights would be cancelled. It has now been revealed that this meant 200 flights a month–or seven flights a day.
“What kills me is that my aircraft utilisation drops,” said Suren Ratwatte, SriLankan Airlines’ Chief Executive Officer (CEO). “In order to make money, I have to fly an aircraft roughly between 11 and 14 hours a day. And when I can’t fly my aircraft for six hours a day, my costs don’t change and my revenue plummets.”
All other flights are to be rescheduled. “We accept that the runway has to be done,” he said, in an interview with the Sunday Times. “We would have preferred that the work be done at night. But the agencies doing the work chose to do it during the day, over our objections.”
The expected revenue shortfall alone–not counting costs–is in the region of US$47 million, a heavy blow for the direly cash-strapped airline. Nonetheless, Mr. Ratwatte ruled out using the Mattala Rajapaksa International Airport during the day because eighty percent of SriLankan’s flights were less than four hours.
“Passengers won’t drive four hours to fly four hours,” he said.
Daytime runway renovation: SriLankan slashes 620 flights
“They certainly won’t drive four hours to fly one hour to Bangalore, which is one of our best routes, or to Chennai, which is another, or to Male.”
The airline is trying to cut some costs during the three-month period. “Once we have confirmation of our slots, and we know exactly how many aircraft we need, we are approaching the leasing companies to get a rental holiday on some of them,” the CEO revealed.
“They have said they are okay with that. So we will have to ground aircraft and not pay for a month for some of them. And that will substantially reduce the costs.”
Mr. Ratwatte also said he hoped that a proposed voluntary retirement scheme for staff would become effective in December, before the runway closure. “During the runway closure, the flying will drop so much and we will have all those people (employees),” he said.
The industry norm is for there to be 175 employees per aircraft. SriLankan has more than double that–a 7,000-strong staff. “I do want to have a VRS because between the time Emirates left and I came in here the head count increased by 30 percent,” he said. Not only has this made office space, utilities and welfare payments expensive, the company’s transport bill is considerable.
Mr. Ratwatte said the airline would be happy to lose between 500 and 600 employees. “But that is a political decision that the Government has to make,” he held. “We have everything in place for a VRS internally, so the decision has to be taken by the Government.”
Meanwhile, the airline is also in discussions with Airbus to find a solution to several A350 aircraft ordered by the previous Government and are scheduled to arrive in 2020. “Airbus is willing to (negotiate),” he said. “They now realise we mean business. Nobody expected us to terminate the A350 leases. The whole world expected us to have those aircraft sitting on the ramp next month.”
Six A330-300s bought from Airbus have been delivered. Four A350s were leased. Four other A350s were ordered from Airbus and are due in 2020. Another A330 was leased while six other A320s were also taken on lease.
There has been much political debate around the price of these leases and purchases. Mr. Ratwatte said it was unlikely that anyone had made commissions on the leases. “What you must understand about the leasing companies is that they are mostly listed on the New York Stock Exchange and they are completely above board,” he explained. “They are terrified of being investigated and will not pay anything.”
“There are a lot of allegations that this guy made money, that guy made money,” he continued. “When you lease an aircraft from one of the big leasing companies, and we deal with the world’s biggest leasing companies, there’s no money to be made. They’re not going to pay you anything. They might take you to dinner but that’s about it. That’s all you’re going to get.”
Were the purchased aircraft overpriced? “Arguably, yes,” he said. “Because there is no clear benchmark to compare it, it is an opinion and not a fact. But my opinion is that they were overpriced, yes, and they were overpriced quite significantly.”