SriLankan Airlines to split business, offer VRS

ECONOMYNEXT – SriLankan Airlines aims to split its operating model, placing its engineering and ground handling units into a separate business from the airline, and reduce staff, its chief executive said.

The national carrier now has 21 aircraft and 6,900 staff and intends not to hire more people for the time being, said Suren Ratwatte, chief executive of SriLankan Airlines and the budget carrier Mihin Lanka.

"We’re working on a VRS (voluntary retirement scheme)," he told a recent forum by the Chartered Institute of Logistics and Transport Sri Lanka.

"We’re looking at splitting the business units and hope to put engineering and ground handling into a separate business and allocate staff to those and as we grew them hopefully we can do so without hiring more and maintaining the same staff level."

The airline’s unit costs had dropped along with fuel prices but ticket prices had also fallen.

"We getting more efficiency everyday but retaining them in the form of revenue and profit is more difficult," Ratwatte said.

"My challenge is lowering costs any further is very difficult." (Colombo/December 04 2015)

The question that isn't being asked.

UL is losing money on their European Routes. The question that has never been asked is why? Everyone else seems to be doing fine and increasing frequencies and adding larger aircraft whilst UL does the opposite.

So - is it....

A) Blah Blah Blah...Competition from Emirates...Blah Blah Blah...Competition from Etihad...Blah Blah Blah...Competition from Qatar...Blah Blah Blah...High fuel prices...Blah Blah Blah...Inefficient older aircraft...Blah Blah Blah...

or

B) The Commercial Department (including sales) is staffed by people who are unqualified,incompetent or both. Their sole purpose is to protect their cushy jobs while they pocket their salary/benefits/commissions. There is zero accountability and it is basically impossible to fire these Donkeys!

Perfect timing - look what I've found....



So much for no government interference - all lies!

UL is nothing but a wealth transfer vehicle - public funds in - funds out into the pockets of various family members and cronies.

This will continue as long as people continue to get away with it - it's a lost cause at present.

The Airline continues to be run into the ground.

SriLankan Airlines to ditch ‘vanity’ routes

SriLankan Airlines will stop flying on ‘vanity’ routes and pull out of markets it can’t compete in to focus on ones with better yields as it restructures its network, aiming to regain profitability, its chief executive said.

“We’re looking at rationalizing all our routes under a strict time line,” said Suren Ratwatte, chief executive of SriLankan Airlines and the budget carrier Mihin Lanka. “We have vanity routes - some of them are going to go.

“It’s not going to be very popular but we can’t help it if there’s no business case. It’s in the works as we speak,” he told the annual conference of the Chartered Institute of Logistics and Transport Sri Lanka.

The national carrier was facing “irrational competition” from the three top airlines in the Middle East – Emirates, Qatar and Etihad – and finds it difficult to compete, Ratwatte said.

These carriers have “cannibalised the market completely” and are adding capacity regularly, he added.

“As you add capacity – it has an inverse relationship with price - as capacity goes up, prices go down,” Ratwatte said. “So how do you compete with that?”

SriLankan Airlines cannot compete with Middle Easter airlines offering “rock bottom” prices, he added.

“Today all the money is made on the front end of the aircraft. Economy class just covers your costs. If you can’t command a premium you cannot survive,” Ratwatte said.

To London the national carrier can command a premium as it is the only non-stop carrier with the biggest capacity.

But to Paris, Frankfurt and Rome, “our yields are a joke because we can’t command a premium – there’s not enough demand,” Ratwatte said. “We lose money on those routes.”

Emirates has the economies of scale and connectivity that SriLankan Airlines cannot match.

“When we try to sell tickets from Europe to Colombo and the Far East, we find Emirates offers better prices and flexibility than we can ,” Ratwatte said. “So it’s almost impossible to compete.”

The China market has been good for the national carrier till recently – until October which was a bad month – while the south East Asian market is also strong.

“We’re going to have to focus on strong points and pull out of markets where we can’t compete,” Ratwatte said.

Truer words were never spoken about UL!

SriLankan Airlines needs to forge an extensive codeshare partnership with Oneworld member Qatar Airways as it further restructures its long haul network. The code share deal must allow SriLankan customers to book routes to Europe (Paris, Frankfurt & Rome) with Qatar Airways , while in exchange SriLankan will offer Qatar passengers connections within South Asia.

Several months back, Qatar Airways deployed its "high-density" A340-600 on its Doha -Colombo route. The new partnership will help absorb the additional capacity as Qatar Airways will start to use Colombo as a hub for destinations throughout South Asia.

How Vietnam ailines doing so well. what is the secret behind this??

I think most airlines in this part of the world are withdrawing routes out of Europe because of the ME3. QF, MH, TG and AirAsia X are examples.

No secret - just people who know what they're doing and less corruption.

These days air asia cmb sector using A320 instead of A333 any update on schedules

Yes they had changed the CMB operation from 4 weekly x A333 to Daily A320 in Sep. AK may have been planned like this inorder to compete with Malindo which starts CMB operation effec 18-Dec-2015.

QF is in a partnership with EK - this is route consolidation nothing more.
MH is a financial basket case. Almost as bad as UL...
TG is also a financial basket case.
Air Asia X - low cost long haul. Different market segment.

You don't see SIA or Air India cutting European Routes. These are premium routes.

I stand by my previous post.

Why anyone would believe anything said by anyone in UL Management is beyond me. They are all political appointees - not a single one of them could hold the equivalent position anywhere else.

SriLankan to review aircraft order

SriLankan Airlines is on track to set up an Airline Maintenance and Repair Centre (MRO) with an Asian based airline counterpart at the Mattala airport, said the airline new CEO, Suren Ratwatte.

He told Daily News Business that earlier negotiations with Lufthansa Techink a German company is no longer in progress since they have abandoned plans for Sri Lanka and set up a centre in Manila. “Our talks with the Asian counterpart is progressing well,” he said.

Ratwatte said that they see tremendous business opportunities ahead for a MRO and it would bring additional revenue to the airline.

Commenting on the re-fleeting of the airline, he said that it was a good move to retire aging aircraft.

“However we must re look at the ‘aircraft order.’ Since the ‘order’ is for wide bodied aircraft that could carry more passengers. What SriLankan currently needs is narrow bodied aircraft, that could be easily filled with passengers.”

He also justified the move to abandon the ‘stop over’ flights to Mattala airport. “I think that is a waste of money and it was a step taken in the right direction. We don’t have an immediate plan to resume flights there,” he said.

Commenting on the creation of Mihin Lanka he said that Sri Lanka could have done without it. “However since it is now up and running we will relook at addressing the ‘minus’ issues of the airline.”

He also said that the partly closer of the Colombo airport for ’runway relay’ has also put additional financial pressure on them since they have to reschedule ‘timings.’ Ratwatte who has being appointed to the Tourism Development Authority advisory board said that he is working closely with them.

A plan to operate flights to Maldives second international airport, Gan, was also disclosed.

It was pointed out that there were several high-end resorts that need better air connectivity and SriLankan could get in there from Colombo.

A former pilot with Emirates Ratwatte, when asked if Emirates is offered aviation fuel at concessionary rates when purchasing aviation fuel he said Emirates does have a bigger fleet and due to this their bargaining power is high.

“However I must say that the price of aviation fuel in Colombo International Airport is very high but it is cheaper in Mattala because of concessions offered to attract airlines,”Ratwatte added.

I don't believe everything UL management says. However QF's 'route consolidation' as you call it, is exactly the same proposal as what the new UL CEO proposed. QF previously flew to Frankfurt and cut said route when the EK partnership came online. And MH's new CEO who is extremely competent has proposed the same idea for his airline. So I think cutting european routes and entering into a codeshare with a ME3 airline is the right decision for UL unless it wants to sustain losses.

In relation to your examples, SIA is extremely well managed and has the scale to operate such routes. Air India however is probably managed worse than UL which is no mean feat. Nevertheless they aren't under pressure to be profitable and as such can maintain such loss making routes. Plus India is a huge market unlike Sri Lanka so such routes can be profitable for them if said airline is actually run properly.

Govt planning to list catering unit of SriLankan Airlines

Sri Lankan government is planning to list a minority stake of 30 percent to 49 percent of Sri Lankan Catering, a fully owned subsidiary of state owned SriLankan Airlines, a media report said.

This will be through a competitive, open bidding process, the report said quoting sources.

The company, the sole airline caterer operating at the Bandaranaike International Airport, will be the first state-owned enterprise to be listed on the Colombo Stock Exchange under economic reform plans announced by the Prime Minister.

The government is also planning to list the ground handling wing of SriLankan Airlines Ltd, the report said.

Mr Ratwatte ^^^ it is called cross subsidizing Not onle Avaition Fuel even landing fees are cross subsidized...borrowing peter to pay paul