Comments /2507 Views / Tuesday, 21 March 2017 00:01
By Uditha Jayasinghe
SriLankan Airlines is facing fresh turbulence from multiple issues, including accusations of directors abusing privileges to upgrade tickets and management coming under fire to show results ahead of a board meeting later this month.
The management and the board of directors at SriLankan continue to fly divided with the former accusing the directors of voting for a move to purchase cheap economy class tickets and upgrading them to business class on its most popular flights, at significant losses to the company.
The board of directors, appointed by the Government but not having any shares in the company, voted for the decision in 2016 and since then have treated themselves to numerous trips at the expense of company funds, highly placed sources within the national carrier told Daily FT.
“The directors voted to purchase cheap economy tickets and upgraded them to firm business class seats. Most of them prefer the Colombo-London flights, which are also the most profitable seats for SriLankan,” a source said on grounds of anonymity.
An average economy class return ticket on the Colombo-London flight costs about Rs. 98,000 but could be as cheap as Rs. 40,000 if purchased well in advance. However, a business class seat, especially during peak winter season, can go for as much as Rs. 500,000 or about £ 30,000 and are mostly sold out of London.
“The Colombo-London flight is very popular because it is a direct flight. People who want cheaper tickets usually fly on the Middle East airlines so SriLankan usually gets very affluent travellers for its business class. This means business class is usually full and the returns are very high for the airline.”
But the alleged self- indulgence of the directors means that loyal customers who want last-minute seats or upgrades and are willing to pay full price do not get tickets, charge officials who side with the management.
“We are losing huge amounts of cash, primarily on the London flights, because of this measure. The directors can well afford to pay business class fares but they choose not to do so and it is intolerable that they are eating into the airlines’ primary revenue earner when the national carrier is in such a dire financial position.”
However, such claims were flatly rejected by the board of directors, which insisted that for the whole of 2016 only three business class tickets on the London-Colombo route were issued to its members and even that in the non-peak months of August and October.
“The highest number of tickets was issued on flights to Singapore, which was 14, but SriLankan operates about 4,000 flights to Singapore each year so this is a negligible cost. The upgrade given to the directors is the same as that granted to politicians or other top officials. There is nothing special in what is given to the board that is only made up of eight members,” a board member said on condition of anonymity.
Members of the board insist that the management was attempting to discredit the directors ahead of a board meeting next week where the management will be held accountable for revenue targets, which are likely unmet as the national carrier grapples with additional revenue losses due to the airport runway upgrade.
“This is simply to deflect attention from the management’s problems,” they added.
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