POLITICS IN SRI LANKA Part 3 G
Posted on April 16th, 2022

KAMALIKA PIERIS

 JR meddled in the transport sector. Ceylon Transport Board had been set up on 1 January 1958, during MEP rule. At its peak, it was the largest omnibus company in the world – with about 7,000 buses and over 50,000 employees.

The government of J.R. Jayewardene was intent on destroying what was now a popular symbol of efficient state enterprise, said       Wikipedia. By Law No. 19 of 1978, the CTB was broken up into Regional Transport Boards (RTBs). Sri Lanka Central Transport Board (SLCTB) was established, but it had no connection to the RTBs.

The partially constructed new CBS building, which had been built with funds generated by the CTB, was handed over to the Urban Development Authority. The Employees’ Councils were scrapped. A large amount of money was spent repainting the buses green.

Further, the change of government in 1977 saw the looting of CTB assets in broad daylight. Buses in running condition were condemned as unusable and sold to backers of the ruling United National Party at low prices. Some of them may still be seen on the roads, three decades later.

Jayewardene also re-introduced private buses running with route licenses. Most private bus owners had political backing and the buses were driven in a careless manner. Passengers faced with a state transport system now on the verge of collapse, had no option but to travel on them.

When J.R. Jayewardene became President of Sri Lanka, it was decided that Air Ceylon was beyond repair and a new airline would be formed with the help of Singapore Airlines. Air Lanka was formed as a fully state owned GCEC company. Principal owners were the government (60%), two national banks and the Ceylon Shipping Corp. (40%), with initial capitalization set at $15.7 million. The airline came under the direct purview of the Head of State.

JR’s grand idea of a national airline just because Singapore had an iconic national carrier, was copycat economics at its worst. We needed a solid base for our economy before we needed a fancy airline, said critics.

Lee Kuan Yew, Prime Minister of Singapore when requested by JR agreed to provide assistance and expertise from Singapore Airlines for a new airline. Lee Kuan Yew had this to say about the venture.

Lee Kuan Yew said, Singapore Airlines employed a good Sri Lankan captain. Would I release him? Of course, but how could an airline pilot run an airline? He wanted Singapore Airlines to help. We did. I advised him that an airline should not be his priority because it required too many talented and good administrators to get an airline off the ground when he needed them for irrigation, agriculture, housing, industrial promotion and development, and so many other projects.

An airline was a glamour project, not of great value for developing Sri Lanka. But he insisted. So we helped him launch it in six months, seconding 80 of Singapore Airlines’ staff for periods from three months to two years, helping them through our worldwide sales representation, setting up overseas offices, training staff, developing training centers and so on. But there was no sound top management. When the pilot, now Chairman of the new airline, decided to buy two second-hand aircraft against our advice, we decided to withdraw. Faced with a five-fold expansion of capacity, negative cash flow, lack of trained staff, unreliable services and insufficient passengers, it was bound to fail. And it did, conclude Lee Kuan Yew.

There was a benefit to Singapore Airlines. SIA’s 747s could not fly nonstop to Europe. The advantage of the partnership for SIA was the right to operate eastwards and westwards through Colombo. Air Lanka at this point had a wide regional and international network, and even made a modest operational profit. Also, Indian passengers could come to Sri Lanka to buy luxury goods rather than going to Singapore.

Air Lanka was the first airline to fly the Airbus A340 in Southeast Asia. The airline was making an operational profit, but was hobbled by debt servicing resulting from commercial borrowings. In 1998 Air Lanka was re-branded as SriLankan Airlines . It was partially privatized,  there was a partnership with Dubai-based Emirates Group. 

 Air Lanka/ SriLankan Airlines  faced tremendous political interference. The government insisted on being involved in all major and most minor decisions of the airline. Decisions were often based on political rather than commercial considerations, said Rajeewa Jayaweera.The work visa of the CEO Sri Lankan Airlines, appointed by Emirates, was revoked and he  was asked to leave the country because he did not do as the government said.

Appointments of Chairmen and Directors to the board of SriLankan Airlines was based on personal relationships, friendships, school ties and as a form of rewarding political loyalists. Expertise in specific fields, experience in corporate governance and what they could contribute to the airline is not the criterion.

Even the few Directors appointed from the country’s blue chip companies prefer  to lie low for fear of the companies they represent being penalized by the majority shareholder for not doing its bidding.

The 13 to 15 Chairmen appointed during the airline’s 37 years, up to 2016,  consisted  of an Airline Pilot, Civil Servants, a Retired General, Chairmen of Blue Chip companies, a Secretary to the Head of State, a Lawyer, a Secretary to the Treasury, and  a Planter, said Rajeewa Jayaweera.  Then came an owner of an Apparel Exporting company, who contributed little other than carry out instructions from the  government . (Continued)

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