Lost in Time : SriLankan Airlines

Editor’s note: This article was written more than five years ago, and I was not as experienced as I am today, at that time. Further, the industry landscape has since changed very much – and if I were to write this article today, I would have taken a different approach. Hence please be kind to keep the above in mind, while reading this article.

Thank you.

 

 

SriLankan Airlines has seen its network being reduced dramatically in recent times – but is this exactly the right thing to do ? Airline Industry Review finds out.

The exit of Emirates from SriLankan saw the Chief Executive post being transferred from Peter Hill to Manoj Gunewardena, who happens to be the brother of Presidential Advisor Sajin Vaas that drove the LCC Mihin Lanka to bankruptcy. Manoj however is a 25 year veteran with the airline having served in many positions and his takeover of the CEO post was seen as a natural progression by many. The new CEO launched a refleeting exercise for the narrowbody fleet and embarked a turnaround project for the airline to make the core operations profitable.
Although SriLankan Airlines Group, which consists of the airline, ground handling and SriLankan Catering, has most of the time been profitable, the core airline operations has not always been so and I fully agree with the beliefs expressed by the current management that the airline should break even on its own. However, should this come at the cost of cutting operations ?

It would seem to an outside observer that the most prominent thing SriLankan has done in the bid to achieve that operational profitability goal is – CUTTING . From fleet to frequencies to onboard service and ontime performance, all are now in a lower level than they were while under EK management, although the reports for the last quarter is not out yet.

Indian Operations

SriLankan A320 at Mumbai © Sean D Silva

While under Peter Hill’s management, the airline was the largest foreign carrier into India, operating in excess of 110 weekly flights to 11 destinations – it is now down to a mere 46 to 6 destinations. Some quote this as a result owing to the fleet renewal – but in my opinion, it is NOT. SriLankan’s A320 fleet is now down to three from the previous five, but the aircraft can be utilized much more and the current fleet is well enough to operate daily flights to two to three more destinations under a 2.5h flying time. Although the increase in operations by Indian carriers as well as changes in market landscape may have contributed to the decision, reviewing whether these cuts have adversely impacted SriLankan’s market position will have merit.

New Destinations
The new management has so far launched one new destination – since they took over on 1st April 2008 – Rome . This has not really been a new flight though. The airline now uses Rome as a tag on to its Paris route, but on a rather inefficient routing, as CMB-CDG-FCO – involving some backtracking.
It is worth noting that the number of cancelled destinations outnumbers this single new route launch.

Codeshares

Prior to ceasing of the management contract, Emirates was UL’s biggest codeshare partner with flights to more than a dozen destinations including the US and the ceasing of management contract saw the end to this codeshare deal too. To fill the gaps, SriLankan soon joined with Etihad, which is now one of SriLankan’s biggest codeshare partners.
However, UL was still lacking access to the US and Australia under the Etihad deal and to void this gap, it entered into a codeshare deal with Malaysia Airlines. The deal took a long time to be completed since UPS, the express freight service based in US, fully opposed this deal as they were once not allowed by Malaysia to operate flights to Subang (IIRC). After so many appeals, MAS and UL however finally were allowed and UL now codeshares on MAS’s heavily loss making KUL-TPE-LAX flight. But has this been successful ? Quite possibly not.
As opposed to quick connections at Dubai with EK, now UL’s passengers have to wait for 7-8 hours at Kuala Lumpur in order to connect to MAS’s flights and inspite of direct flights to US, now they have to experience two stops, which too is on a not so comfortable 777-200ER.

Frequent Flyer Programme
Yet another aspect that UL lost with EK’s departure was Skywards, the frequent flyer programme the two had built since late 1990s. To replace this, SriLankan created its own FlySmiLes, a programme with identical tiers but lesser benefits and where you have to manually redeem points by providing your boarding pass – long gone are the days of automatic Skywards miles.
The customer response has been very poor, with only 3% of previous Skywards customers signing up.
When asked about this by a local newspaper sometime ago, the management had however responded that “It took Emirates years to make their frequent flyer programme popular”.

CUTS
The highlight of this article – CUTS.

Fleet : From 16 to 12
Freighter services : Fully suspended
Indian flights : From 110 weekly to 46 weekly
SIN flights : From 14 to 7
KUL flights : From 14 to 7
DXB flights : From 14 to 7
KWI flights : From 9 to 7
NRT flights : From 3 to 2
CDG flights : From 5 to 3, and coupled with FCO
TRV flights : From 14 to 7
BLR flights : From 7 to 4
Flights to CCJ, COK, HYD, GOI and GAY fully suspended.

Notice that most of these cuts took place well before the global decline in demand. Nevertheless, most other airlines have increased flights to Colombo, specially following the end of war. A good example is Emirates, where it now operates 18 weekly flights from DXB instead of the previous 8 or 9 weekly flights.

The solution
The point of this article however was not to personally attack on anybody at SriLankan, but instead to discuss what can be and should be improved. SriLankan has a superb workforce which has done some unbelievable stuff – back in 2001, when the Tamil Tiger terrorists destroyed a half of its fleet, the engineers repaired the attacked aircraft in a surprising three months – which Airbus had estimated to take at least nine months. The airline has been through some of the worst crises of recent times including, but not limited to SARS, the 2004 Tsunami and terrorist attacks. So they truly have the power to overcome all these and succeed . What can be done to can be done to achieve this ?

This is what I propose.
* Taking advantage of the newly dawn peace in Sri Lanka, UL should expand again and reinstate Colombo as a major hub and a gateway to South Asia. Its strategic geographical location and second-to-none tourist attractions will help make this a reality. Whilst the  market place may have become much more competitive – especially with large player Emirates now being a rival than a partner – shrinking an already small network could make SriLankan irrelevant on the marketplace and more vulnerable to failure.

Fleet overhaul

SriLankan 4R-ADA Asia's First A340 ©Thomas Ernst

I would suggest UL to add 2 A330-200s, two A321-200s and two DHC 6 Twin Otter aircraft along with an A310 freighter. The A321s will be used for regional travel and the Twin Otters will be used to relaunch its highly popular domestic tourist flights. The favorable lease terms in the market right now will help reap the harvest of this essential investment.
The Business Class on certain A340s and A330s should be refurbished with the installation of 18 flat bed seats.
– SriLankan’s newly added narrowbodies should be good enough for a few more years and their widebody fleet ( of five A340s and four A330s ) should be replaced by either a mix of 787s or A350s, both of which have the capability to replace both A330 and A340 fleets. Since neither A350 nor 787 delivery slots are available till at least 2014, I believe that SriLankan should add more A330-200s to its fleet.
– One might argue that the A340s would be a better fit to SriLankan, but UL simply does not have that many routes to be used by an A340-500 or A340-600 and CMB’s runway is not lengthy enough to permit a fully laden A340-600 departure to LHR at noon hours too. Hence the only suitable aircraft would be A340-300. But since there simply is not much of a difference in terms of performance between A340-300 and A330-200 and because of a better resale value, the A330-200 emerges as the clear winner here.

Network
– I would suggest the following changes
LHR – up to twice daily from current 12 weekly
SIN & KUL – relaunch of the twice daily triangular flights
CDG – to be delinked from FCO. Two weekly flights to be operated nonstop with one going via MLE. To be operated solely by A330s.
FCO – to be relaunched as UL585/6 with twice weekly flights continuing onwards to MXP. One weekly flight to be operated as UL583/4 on a CMB-MLE-FCO-MLE routing.
PEK – to be increased to five weekly flights with two new flights going via MLE on a CMB-MLE-PEK-MLE-CMB routing (assuming bilateral rights permit).
KWI – to be increased from 7 to 9 weekly with addition of two new nonstop twice weekly flights.
BLR – to be increased from 4 weekly to daily using A321s and A320s.
BKK – to be increased from 7 to 9 weekly with UL424/5 evening flight on days 4 and 6 using A330s.
FRA – to be increased from 4 to 5 weekly flights.

New destinations to be launched
MAN ( Manchester ) – thrice weekly aboard A330s. The demand certainly is there.
SYD ( Sydney ) and MEL ( Melbourne ) – The largest Sri Lankan community outside Sri Lanka resides in Melbourne, but however the bilateral agreement between Sri Lanka and Australia seems to call for four weekly flights to be in place once an air service is launched between the two countries, since the yield to MEL cannot justify four weekly flights, the flights would be launched in the following manner.
UL678/9 CMB-SYD-CMB 0500-2000-2120-0330+1 1,4 332
UL666/7 CMB-MEL-SYD-CMB 0255-1730-1835-2000-2120-0330+1 2,6 332
All times local
HYD ( Hyderabad ) – Should be relaunched with four weekly A320 flights.
COK ( Cochin ) – Should be relaunched with four weekly A320 flights.
CGK ( Jakarta ) – Twice weekly A321 flights.
KTM ( Kathmandu ) – Thrice weekly A320 flights.
ISB ( Islamabad ) – Twice weekly A320 flights via BOM
ZRH ( Zurich ) – ZRH will be launched with initially twice weekly flights on CMB-MLE-ZRH-MLE-CMB route and once weekly nonstop CMB-ZRH-CMB using A330s.
MXP ( Milan ) – Twice weekly CMB-FCO-MXP-CMB as mentioned above.

SriLankan SkyChain Freighter network.
Although global freight market as a whole is not in a much good climate, the South Asian region appears to be less affected and thanks to CMB being a popular cargo port – UL will be able to make a sizeable presence on regional freight by capitalizing on these advantages. When the market returns to normal, these investments will reap back their harvest.
DXB ( Dubai ) – 2 weekly
TRV ( Trivandrum ) – weekly
MAA ( Chennai ) – 2 weekly
MLE ( Malé ) – 2 weekly
BKK ( Bangkok ) – 2 weekly
BLR ( Bangalore ) – weekly
SHJ ( Sharjah ) – weekly

Marketing
SriLankan needs to take its message to a wider audience and should make the best use of its website and social networks. They should also influence more Sri Lankans to fly by using innovative methods such as mobile advertising and enabling innovative methods to book flights – eg: using a bank centre.

The idea of this business plan is to make investment at the right time and to become a leading player in the regional market by the time market recovers. This certainly can be done.
SriLankan already has a very high inflight service standard with a great crew which is sure set to make anyone want to fly again with them. But the above mentioned steps are not enough to make SriLankan a leader in the region again – the government shall stay away from the airline and let the management take independent decisions. They should not be afraid to try new things and should make the best use of CMB as a hub, although it is a long way to go – CMB certainly is a far better connecting point to South East Asia and Australia than DXB, AUH and DOH are.
Emirates sure did some good to SriLankan, but in many people’s belief – Emirates was benefited from the deal much more than tiny UL did. It is said that EK took away landing slots of UL at some major airports and it was a popular fact that they did not want UL to resume flights to Australia and some other destinations to protect own network. It was also said that EK did not allow UL’s plan to purchase A321s for Indian routes. Now that SriLankan is free, they should no more remain lost in time – SriLankan, now is the time for you to grow !

What do you think ?
Please leave a comment and let me know.

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