Move on SriLankan

The government has finally opted out of the SriLankan-Emirates management contract after a lot of heartburn over the years.
Ever since Emirates took over full management of the airline -nearly a decade ago and now ending on March 31, 2008 - there has been both bouquets and brickbats flying at the national airline.

It was triggered off by the opposition crying foul over the privatization saying Sri Lanka didn’t get the best price for the stock and that the benefits that would accrue to Emirates, even though it was a minority shareholder, far exceeded that of what the government had won out of the deal.

Many of these issues which emerged over the years were again raised recently after both sides began negotiating a fresh pact with the 10-year management agreement ending in March 2008.

Main among these issues is the inability of Sri Lankan government representatives on the board of the airline to exercise any control and be involved in the decision-making, which is the prerogative of Emirates. This was one of the frustrations of past and present chairpersons and the focus of current negotiations on a new contract – before Emirates announced it was pulling out of the management --, so much so that it became a contentious issue in the discussions as the government was insisting on a bigger role in decision-making including appointments.

One thing appears to be unclear following the drama over Peter Hill: as to whether the government was in any way putting pressure on Emirates Airlines to quit management while retaining its (Emirates) stock or that Emirates was itself seeking to exit if not given full control. If one or the other happened, the departure of Hill was any way inevitable.

Be that as it may, it’s important for the government and the powers-that-be to now focus on the bigger problem – the rocky transition to full management control and an expected exodus of staff, notwithstanding the common problem of attracting tourists to a strife-torn country.

While the leisure industry, the biggest sector to be affected if there is a major upheaval during the change-over, has diverse views over what could happen, many expect an outflow of staff particularly pilots. As much as 20-30 pilots are likely to quit and join other airlines, including Emirates.

Some industry analysts believe the airline should move on and get ready, adequately, for the change-over in management in March, saying Sri Lanka has enough and more skills to run an airline on its own (not however the way Mihin Air is run with government funds and rising debt).

“We should stop talking and start preparing,” one said. Others disagree, saying trying to compete globally without foreign expertise would be extremely difficult and an unwise move.

Another issue they see is the exodus of pilots as there is a global shortage of pilots the world over with economic expansion in India and China leading to rising demand for air travel and new airlines.

The Peter Hill affair was badly managed and the decision to ask him to vacate should have been a business decision, rather than one based on personal animosity, potty politics or anything unconnected with the professional running of the airline. It is another example of why the government should stay clear of business.

Given the negative vibes that have been generated by this ‘poor’ business decision, the key now is to ensure continuity of the airline, a smooth transfer, maintaining the statuesque in terms of staff strength and future decisions based on operations and not anything else.

With this national perspective in mind we urge the government to set up a crisis management team and/or (management) take-over committee that would see the smooth transfer of management to Sri Lankan hands from Emirates to minimize any problems that would impact on the country and the economy, particularly the Middle East labour market and the Indian routes which are the most profitable now.