July 25, 2021, Colombo: The global aviation industry continues to face severe economic pressures as the pandemic looms into the future. Financial woes aside, the pandemic’s longer-term effects on aviation are emerging in the form of hygiene and safety standards being more stringent, and digitalisation continues to transform the travel experience. SriLankan Airlines Chairman Ashok Pathirage shares his insights into the cost-saving measures implemented by the airline to mitigate the impact on the livelihoods of its employees and the Airline. Even though, the airline faces profound financial shortfalls it lauds the efforts of its employees to support the airline’s operations under very challenging and trying conditions.
The beginning of the year 2021 has been a most welcome renewal of hope for all of us, especially for SriLankan Airlines as we have been waiting patiently for international travel to resume. Despite facing the toughest times as an airline, due to the global pandemic, 2020 and 2021 showed us the core of courage and resilience of our staff at SriLankan who faced the pandemic like champions both as employees and individuals, fulfilling their obligations as part of the National carrier that serves the nation.
As the nation battles with the third wave of the Covid-19 pandemic, and this time more brutally than the previous instances, it is the courage and resilience of our valued staff which helped the Airline to face the gravest challenges. It is with great admiration and respect that we, the Board of Directors and the Management Team recognize the commendable contributions of our valued employees who ensured that daily operations continued without disruptions even under difficult circumstances. I send my sincere gratitude and appreciation to our committed employees for their continued support, dedication, and service.
Since the beginning of the pandemic, every staff member of our SriLankan family, as well as the trade unions, have been unreservedly supportive regarding the drastic measures, we as the management were bound to take, especially in cost-saving measures including salary reductions and other benefit curtailments which are continuing. Although being directly affected by these actions both as employees and individuals, they have been nothing short of a collective emblem of team-spirit with resilience throughout the season of tribulation, as they continue to prevail in this optimism, which continues to show that they are our greatest asset.
The global pandemic has taken an enormous toll on social behaviour as people are looking forward to reconnecting with family and friends overseas whom they haven’t seen for almost a year and a half. The outlook for the tourism sector yet remains highly uncertain. The coronavirus pandemic continues to hit hard, with international tourism expected to decrease, many countries have taken immediate action to restore and re-activate the sector, while protecting tourism ecosystems. These include preparing plans to support the sustainable recovery of tourism, promoting the digital transition, and moving towards a greener tourism system, and rethinking tourism for the future.
Our airline has a clear vision with an aggressive business plan to take our National carrier towards a successful and profitable entity to serve our Nation, customers, and our valued employees, undoubtedly our biggest asset. However, due to the unexpected and unfortunate relapse of the pandemic outbreak, we had to postpone some of our plans until such time the current state of affairs returns to normalcy.
We have taken every endeavor to explore all business opportunities to keep the Airline afloat even though the atmosphere in the world is unfavourable. We have introduced several measures to ensure every function of the business remained fully operational to grab every business opportunity. As new variants emerge, we are carefully monitoring the situation and we will constantly reassess our strategic plans and adjust accordingly.
Globally the airline industry has experienced a decrease in capacity of approximately 60% to 80% due to the Covid-19 pandemic with containment measures in place. SriLankan Airlines experienced a revenue reduction of 70% during the financial year 2020/21 when compared to the year before.
Despite ongoing border restrictions and airport closures, we have continued to fulfill our obligations as the National Carrier by sustaining global trade and repatriating stranded Sri Lankans; 74,032 passengers were repatriated from 229 flights between April 2020 to March 2021. However, from April to June 2021 35,612 passengers were repatriated using our scheduled flights. We also adapted to meet the increased demand for transportation of air cargo, resulting from the suspension of flights to Sri Lanka by other carriers.
We will be resuming flights to the Russian capital, Moscow this July, with a weekly scheduled flight between Colombo’s Bandaranaike International Airport (BIA) and Moscow’s Domodedovo Airport (DME). Using an Airbus A330 configured for 269 economy and 28 business class seats we will not only facilitate travel but will be the impetus for building closer bilateral business connections between the two countries.
Despite the massive impact on global tourism, the airline opted to strategically steer into cargo operations. Our existing fleet was sufficient to cater to cargo operation and the limited passenger operations. The wide-body fleet was used prominently for cargo operations while the majority of the narrow-body fleet was kept grounded due to lack of utilization for passenger services. The expansion of our cargo operations strategically reduced the adverse effects of passenger travel.
The present schedule consists of a network optimizing passenger and cargo contributions to over 29 destinations. New Destinations in the present schedule include Sydney, Incheon, and Nairobi with Frankfurt and Moscow to commence by the end of July. Over 60% of the uplifted capacity was allocated to local exports to ensure a continuous foreign currency inflow to Sri Lanka in the hope of strengthening the domestic export segment. SriLankan Airlines operated 3,039 scheduled flights and 165 cargo charters/ non-scheduled operations for uplifting Personal Protection Equipment (PPE) and essential goods connecting the Far East, Africa, the Indian Subcontinent, Europe, and the Middle East since the onset of the Covid-19 pandemic from April 2020 to June 2021. Cargo Flights carrying a tonnage of 77M Kgs supporting the national economy.
We managed to bring down the cash burn-out substantially by approximately 44% through re-negotiating aircraft lease contracts to achieve both lease rent reductions and deferrals, employee-related cost savings, implementing a Voluntary Retirement Scheme (VRS), restructuring the organization to make it leaner, cross utilized the existing cadre and job amalgamations, ceasing external recruitments other than for operationally critical vacancies, reviewing unproductive policies and practices. However, the cash burn is forecasted to continue until at least the end of this year, as we expect continued severe revenue losses from the aviation industry.
We have taken many steps precautionary measures to ensure the safety of passengers when flying with us. The health and safety measures span across the entire passenger journey. Our efforts were recognised by Airline Passenger Experience Association (APEX) with a diamond rating, and we pride ourselves as the only airline to receive such a rating in South Asia.
Further, the airline’s efforts to ensure the wellbeing of employees since the onset of the pandemic whilst maintaining a productive working environment across all operational and non-operational areas of the airline were recognized and highly commended at the prestigious Asian Leadership Awards (ALA) 2021 by bestowing upon us the award for “Best in managing health at work” in the “Asian HR Leadership Awards” category. This award is a result of the sheer determination and team effort of all SriLankan staff and clear evidence that the new challenges faced due to the pandemic and subsequent crisis has not stopped our committed staff members from doing their best showcasing their excellence at all times.
SriLankan Airlines has successfully rolled out vaccines administered by the airlines’ medical center to 95 % of our flying Crew who are fully vaccinated and more than 80 % of our operational and other staff are also inoculated. Through the assistance of government authorities, the Company is continuing its staff vaccination programme to reach 100%. I would like to express our appreciation to the government and the health authorities for providing the required vaccines to the airline staff, which was a timely and critical need to ensure uninterrupted operation.
We expect that many countries will open their borders for air travel by the end of the year, enabling us to recommence our commercial passenger operations and begin our journey towards recovery. We will constantly reassess our plans based on the evolving nature of the crisis with appropriate adjustments. The future of SriLankan Airlines lies in rebounding passenger travel both in numeric and caliber. All our periodic targets are contingent on international air travel being restored.
We look forward to the end of this crisis, focusing our energy on the success of our Airline there in turn supporting the national economy.
Overall, we foresee a large scope of potential optimism and await the days of conquering the skies with our former glory.
I take this opportunity together with the Board of Directors, the management, and the employees, to thank, His Excellency the President and the government of Sri Lanka for the trust they have placed in us, and the continuous support extended to the National carrier.