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An interview with the Managing Director SriLankan Airlines Tim Clark The fresh approach to our Annual Report this year is an apt break with a traditional style, when we look at SriLankan today, in the aftermath of an extremely difficult year. The airline has emerged leaner, stronger and more resilient than before - change has spread far and wide across the gamut of our operations.

In keeping with this spirit of change, my contribution to this report will seek to answer concerns that have reached the airline from many quarters. I believe this is the right time to place before our employees, shareholders and the public, a proper response to these concerns in the interests of greater understanding and appreciation of SriLankan Airlines and all we seek to achieve.

Why is SriLankan against an 'open skies' policy?

We are not against an 'open skies' policy at all and would welcome such a move by the Government of Sri Lanka,providing that it is based upon reciprocity. We do not believe however that the introduction of an 'open skies' regime in Sri Lanka alone will lead to a large increase in foreign airlines operating to Colombo.

Today for example there are 57 bilateral air services agreements signed between Sri Lanka and other countries, yet only 15 of these are used by foreign airlines.

Why have you deviated from the original business plan presented before privatisation?

The original business plan was developed during the latter part of 1997 and presented to the Government of Sri Lanka in January 1998, just prior to the privatisation process taking effect. It set out the objectives for the airline for the ten-year period up to 2008 and described the implementation strategies that would be used by the Emirates management team. The plan itself was the starting point, it was never meant to be 'cast in stone', but would be revised from time to time with Board approval to meet the changing conditions both domestically and internationally, in the aero-political, financial and economic environment.

Is Emirates trying to make SriLankan a regional airline?

With our current route network stretching from Tokyo in the East, to London in the West and 27 destinations in between, I believe we can describe ourselves as a truly international airline. Certainly, we had to reduce our route network following the tragic events of last year, but our ambition remains the same profitable,sustainable growth with additional routes and aircraft being added when economic conditions are favourable. Emirates and SriLankan compete on the same route network. Isn't this is conflict with the spirit of a partnership?

On the contrary, the benefits that result by both SriLankan Airlines and Emirates both operating on certain routes are many. By jointly marketing both products our customers have more choice, tickets are interchangeable, we are able to offer more destinations and better connections through our twin hubs of Colombo and Dubai and we are far stronger jointly to face the competitive actions of other airlines.

They say that SriLankan is spending huge sums of money to purchase IT systems from emirates. What do you have to say?

It is true that the company has invested heavily on Information Technology. In 1998, we had but a handful of personal computers, none of the in-house IT systems were Y2K complaint and the systems that were supplied by third parties did not communicate very well with each other.

We developed an IT strategy for the airline, using the expertise and experience of Emirates. Today, we have one of the most advanced IT infrastructures in Sri Lanka, providing an integrated approach to our business requirements. Any system that has been supplied by Emirates has in accordance with the shareholders' agreement, been approved by the Board of SriLankan Airlines.

Is it true that SriLankan was forced to absorb an Emirates placed order for Airbus A 330s?

No it is not true. As part of the original business plan agreed with the Government of Sri Lanka, Emirates would acquire on behalf of the company, six Airbus A 330-200 aircraft at very favourable terms which they enjoyed being a launch customer with Airbus for this aircraft type. These aircraft were ordered in addition to the original order placed by Emirates for their own needs,and it is worth noting that subsequently, Emirates have placed further orders with Airbus for A330s to meet their increasing demand for capacity.

There have been suggestions that the company has being indiscriminately selling off assets and re-leasing them back without a net advantage. How would you explain?

The company has faced exceptionally difficult trading conditions during the last couple of years and so, with Board approval, aircraft and engines were sold and leased back to conserve cash, to raise funds for working capital and protect against ownership risk. To amply justify this decision our two Airbus A 320s were sold for US $ 26 million each, in December 2000, today those aircraft are valuable at a little more than US $ 16 million.

It is said that SriLankan is exploiting its positions as the sole provider of ground handling services at BIA by charging exorbitant prices and thus discouraging other airlines from flying to Colombo. What do you have to say?

The basic charges applied by the company today for ground handling services at the Bandaranaike International Airport, have not been increased at all from those being applied before April 1998, when Emirates assumed management control.

Where we have provided additional services to our customers, like for example a baggage reconciliation system,then charges have been introduced to cover the cost, but these have not significantly increased the overall charges. Indeed volume discounts are now offered to airlines based upon frequency which were never offered before.

Does the airline enjoy government subsidies?

Since privatisation, the company has neither asked for nor received any subsidies or funding from the Government of Sri Lanka.

What has Emirates done for SriLankan?

Against a background of an ongoing security situation and the continuing difficult economic conditions within Sri Lanka, I feel that the company has made quite remarkable progress in achieving most of the objectives set out in the original business plan. We have developed into an award winning international airline,equipped with a modern all Airbus fleet with state-of-the-art on board facilities, first class levels of service delivery and an on-time performance that is probably the best in the region. Stand alone profitability for the airline has so far eluded us, but I am confident that if the peace initiatives, being pursued by the Government of Sri Lanka. Continue to make progress then a positive bottom line will be achieved in the near future.

Why did SriLankan link Male directly with other key destinations?

Following the attack by terrorists on the Bandaranaike International Airport last July, many countries increased the level of their security advisories on Sri Lanka, warning their nationals not to visit the country. This resulted in an immediate and catastrophic decline in the number of visitors to Sri Lanka, as well as passengers using Colombo as a transit point. In order to survive, the airline had to seek new markets rapidly whilst doing its best to protect existing ones. The Maldives provided us with an excellent opportunity to provide non-stop services between Male and Europe and Japan, whilst continuing to serve our home market where demand was weak.

Is it correct that SriLankan's role as the national carrier has been marginalised since the partnership with Emirates?

On the contrary, I believe that SriLankan Airlines has strengthened its position as the national carrier. As a result of powerful advertising campaigns in the international media, effective promotions in overseas markets and major industry awards success, we are gaining worldwide recognition as the leading airline in South Asia.

What have you done to promote Sri Lanka as a tourist destination?

We have actively co-operated with the Sri Lankan Tourist Board, the local travel trade and overseas tour operators in the promotion of Sri Lanka. We have participated in numerous exhibitions and trade shows overseas, sponsored visits of the media and travel agents to Sri Lanka. We have established our own leisure business unit, trading as Sri Lankan Holidays, marketing a complete range of holiday programs, ranging from stopover packages to special in test tours.

We have spent over Rs. 500 million over the last two years in promoting the country and our airline.

Is there anything else you would like to add?

The last four years have been a most challenging period for the company especially the events of the last 12 months. But we have survived all of this when some other well known airlines went out of business and I believe we have emerged fitter, leaner and more determined than ever, to take advantage of the opportunities that he ahead. Once again our staff have performed magnificently and I am sure that with their continued dedication and support we can look to the future with considerable optimism.

- (Source: SriLankan Airlines Annual Report 2001/2002)

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