SriLankan Airlines becomes a model for airline privatization in South Asia
SriLankan Airlines was used as a model for airline privatization in South Asia by the International Transport Federation, at a recent seminar on “Restructuring, Privatization and Globalization of Civil Aviation in South Asia”, in the capital of Bangladesh, Dhaka.
K.J.L. Perera, President of the Jathika Sevaka Sangamaya employees union of SriLankan Airlines made a presentation on the subject. The seminar was attended by union representatives of state-owned airlines in the South Asian region - Indian Airlines, Air India, Biman Bangladesh Airlines, Pakistan International Airlines, and SriLankan Airlines.
"SriLankan is the only privatized airline in South Asia, and other countries in the region are viewing us as a model because they are moving towards privatization themselves," said Perera. "The others had many questions about why SriLankan was privatized, how the partnership with Emirates works, how our union rights are protected, and the improvement of working conditions."
The manner in which SriLankan discloses information regarding its financial performance had impressed representatives of other airlines. "They had never seen such transparency from an airline's management," said Perera. SriLankan publishes its quarterly financial results in its staff newsletter, Monara.
SriLankan was privatized in April 1998, when the government of Sri Lanka sold a 40% shareholding to Emirates Airlines, which was also contracted to manage the company for a period of 10 years. Employees were gifted shares by the government in accordance with their service. The government of Sri Lanka retains the majority shareholding, while Emirates has increased its stake to 43%. The airline’s infrastructure underwent a thorough overhaul, which resulted in the adoption of a whole new approach to its operations. Cost-effective strategies were introduced; new pro-active management teams were put in place; computer technology became the basis of everyday activities; the airline’s network is constantly reappraised; and product enhancement has become a part of the airline’s philosophy. A key change was the acquisition of an all-Airbus fleet of A340, A330 and A320 aircraft, to replace the ageing Lockheed Tristars. The airline was also re-branded.
SriLankan Airlines presently flies to 42 destinations in 23 countries across Europe, the Middle East and Asia, and has been steadily expanding its services.
SriLankan's Voluntary Severance Schemes had been discussed in detail when participants queried whether privatization means having employees laid off. "I explained that our employees were given an excellent deal if they wanted to leave, and no-one was made redundant. They saw how SriLankan was able to survive the two crises of 2001 because we were already fit and trim as a company and were able to take the blows," said Perera. "They were particularly impressed that SriLankan is now recruiting more staff for its expansion, at a time when other airlines are trimming staff.”
Of particular interest had been SriLankan's strategy in the wake of the July 2001 airport attack and the September 11 attack which devastated airlines around the world. SriLankan's strategy of re-routing flights through Male after the airport attack, and the suspension of services to non-profitable destinations, also came in for much praise.
The contents of Collective Agreements signed by the airline with employee unions were also discussed. SriLankan’s collective agreements guarantee increments to employees, while other airlines have been unable to raise salaries for several years.
The many human resource development programmes that have been instituted since privatization to upgrade employees' skills were also discussed, as were its new grade structure and pay structure.
Media Relations Section
Corporate Communications Department
SriLankan Airlines Limited
May 12th , 2004
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