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SriLankan Airlines carries record number of passengers last year

SriLankan Airlines in its recently ended financial year carried the highest number of passengers ever in the airline’s history. Based on draft un-audited accounts, the total operational revenue increased to LKR136.68 billion from LKR129.48 billion in the prior year. The year was extremely challenging for airlines worldwide, with the International Air Transport Association (IATA) estimating an 8 percent global decline in air fares in US dollar terms.

Despite these challenging conditions, SriLankan Airlines managed to control the decline in its average fares to only 3 percent in US dollar terms year-over-year. This was a satisfactory performance in relation to many leading airlines in the world that have seen substantially higher fare declines.

The depreciation of the Sri Lanka rupee against the US dollar had a significant negative impact on the airline, as a majority of costs in the global airline business are USD denominated. The impact of this was further worsened by the relatively high price of jet fuel in Colombo, where the largest share of the airline’s fuel uplift takes place.

In the face of these challenges, the airline accelerated its cost reduction efforts, enabling a reduction of its Unit Cost (CASK) in US dollar terms.

During the last quarter of the financial year, the airline’s financial performance was further significantly and adversely affected due to the very necessary runway re-surfacing project at Colombo’s Bandaranaike International Airport. This required the airline to cancel over 600 flights during the period. The key performing units such as SriLankan Catering and the ground handling entity recorded profit improvements.

At the end of the year, SriLankan was serving 36 international destinations from its hub in Colombo, with an operating fleet of 24 aircraft. It has already announced plans to add three new destinations in India from summer 2017, thereby becoming the largest foreign airline into India by the number of cities served.

The primary shareholder, the Government of Sri Lanka, is undertaking an initiative to select a suitable strategic partner for the airline.

PRESTIGIOUS FOUR STAR AWARD

SriLankan Airlines was honored with a prestigious Four Star Rating by the Airline Passenger Experience Association (APEX) in the first ever airline industry rating program based solely on feedback from passengers. APEX (www.apex.aero) is the world’s only non-profit membership trade association dedicated to improving the entire airline passenger experience.

A total of 470 airlines worldwide were rated, with only 12 percent of airlines achieving five-star status and 14 percent reaching four-star status. Using a five-star scale, more than 500,000 flights were rated anonymously by passengers between 24th October 2016 and to 31st July 2017. Passengers rated their overall flight experience and also provided ratings in seat comfort, cabin service, food and beverage, entertainment and Wi-Fi.

SriLankan Airlines was placed in the Major Regional Airline category, with the other categories being Global Airlines and Low Cost Carriers. The awards were presented at a gala ceremony in Long Beach, California on 25th September during APEX EXPO, a conference attended by more than 4,000 airline industry professionals which showcases airline related technologies, products and services.

SriLankan recently won a host of accolades including “World’s Leading Airline Operating to the Indian Ocean Region” at the World Travel Awards; “Best Full Service Airline in Central and South Asia” for two consecutive years at the Future Travel Experience Asia Awards; “Most Innovative Marketing Airline in China” by Life Weekly magazine; “Best Airline in South Asia” at the Top Travel Awards, also in China; and “Best International Airline – Asia” for two consecutive years at the Tamil Nadu Tourism Awards.

The airline has been rapidly modernizing its fleet with the addition of brand new wide body A330-300 and narrow body A320neo and A321neo aircraft. Passengers now enjoy a service with comfortable seats, state of the art entertainment systems, excellent in-flight cuisine, on board connectivity (Wi-Fi & GSM) and flight attendants famed for their warmth and caring.

SriLankan’s global network covers 105 cities in 47 countries and as a member of the one world global airline alliance it also connects its passengers to one world’s worldwide network of more than 1,000 destinations in 160 countries.

ACHIEVING SUPERIOR LEVEL OF ON-TIME PERFORMANCE IN 2017

SriLankan Airlines has recorded a consistently superior on-time performance during the first six months of this year. The latest statistics by the global flight data tracker Flightstats.com ranks Sri Lanka’s National Carrier as the 5th most punctual among 40 of the world’s leading airlines.

SriLankan’s flights were on-time 86.49 percent ahead of the time, far ahead of the average 78.33 percent achieved by the 40 airlines Flightstats monitors. These include many of the finest carriers in the Middle East, Europe, Far East, Australia, North America, South America and South Asia.

SriLankan’s consistent performance over the entire first half of 2017 resulted in it being ranked in the top ten of these airlines for four of the last six months, with on-time ratings of 81.52 percent in January, 85.88 percent in February, 83.67 percent in March, 85.21 percent in April, and 85.36 percent in May.

The high on-time performance is particularly impressive when taking into account the congestion and stresses that arose during the runway re-surfacing at Colombo’s Katunayake airport, which is SriLankan’s home base, during January to April 2017.

SriLankan’s Ground Handling division, which has a policy of never compromising on the safety, security and global award-winning service levels to its passengers, is the sole provider of services in Colombo. Its performance has led to consistently favorable comments from its airline customers as well as passengers.

SriLankan GH handled approximately 9.5 million passengers on over 57,000 flights of all airlines at BIA during the financial year 2016-17. It is extremely challenging for any airline to achieve such high levels of punctuality. Many of the elements that effect performance are beyond its control such as weather, air traffic control issues, customs and immigration control formalities, bird strikes, airport congestion, etc.

The airline industry defines a flight as being ‘on-time’ if it arrives or departs within 15 minutes of its scheduled time. Airports and airlines are rated for flights arriving and departing throughout their hub airports and global networks on this basis.

SriLankan Airlines won a host of awards for service in recent times, including “World’s Leading Airline Operating to the Indian Ocean Region in 2016” at the World Travel Awards; and “Best Full Service Airline in Central and South Asia” for the second consecutive year at the Future Travel Experience Asia Awards 2016. Its route network presently covers 105 cities in 47 countries with a sophisticated all-Airbus fleet that has been modernized recently with the induction of brand new A320neo, A321neo and A330-300 aircraft.

As a member of the one world global airline alliance, SriLankan Airlines connects its passengers to over 1,000 cities in 160 countries in the one world network.

RESTRUCTURING OF OPERATION

The national carrier SriLankan Airlines is restructuring its operations to reduce losses. Stringent cost controls, heightened accountability and transparency have been cornerstones of the new strategy.

In the Financial Year ending 31st March 2016, the airline recorded a significantly improved performance compared to the previous year. It is encouraging that the airline’s performance in the first five months of the financial year has seen a similar trend of improved performance. The performance for the first five months of the current financial year witnessed a 37 percent improvement.

The performance was further impacted by the depreciation of the Sri Lankan rupee. The total interest bearing liabilities as at 31st August 2016 to banks/financial institutions was USD 478.5 million (LKR 69.7 billion). The interest cost for the current financial year is estimated at LKR 6.2 billion.

The fleet strategy for the future will complement the network strategy of more medium and short haul destinations using narrow-body aircraft and wide-body aircraft with lower ownership costs. The routes to Continental Europe will no longer be operated by the airline. SriLankan’s gateway to Europe will be London, with Continental Europe being served by a number of code shares with partners, offering passengers a seamless product.

Other potential destinations in India and South East Asia are being evaluated and will be introduced as the narrow-body fleet deliveries. Additional frequencies operated will be operated to the Seychelles and Dhaka will receive wide-body flights. Aircraft Lease costs, being the second-largest cost item for the airline next to fuel, had to be addressed.

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