Conflicting rules at SriLankan Airlines weaken sales agents monitoring
ECONOMYNEXT – Lack of clear responsibility to monitor general sales agents at state-run SriLankan Airlines had compounded a problem where agent commission had been increased, contracts renewed without review even when sales revenue and targets fell, a commission of inquiry heard.
Witnesses at a commission of inquiry into alleged irregularities at SriLankan Airlines and Mihin Lanka, a failed budget carrier was told that two departments which could have monitored GSAs had conflicting responsibilities and in some cases none had done a cost-benefit analysis.
Top management had ignored analysis, when they had beendon.
Ex-Industry Affairs Manager Yasmeen Majeed testified at a Presidential Commission of Inquiry that it was the responsibility of the Revenue Accounting division to conduct financial reviews of GSAs prior to signing, and regular cost-benefit analysis, according to the manual in the Industry Affairs division.
Revenue Accounting Senior Manager Upekha Abeysekera testified that according to the 2014 manual in their division which formalized past guidelines, the responsibility for the reviews was with Industry Affairs.
“The practice is that Internal Affairs Manager has to send financial statements to the Senior Manager Revenue Accounting,” she said.
“We don’t get involved with GSAs before their appointment, so we are not aware of anything.”
“There’s nothing to stop us from asking, but we are not aware of what is happening unless someone tells us,” she said.
The Revenue Accounting division is responsible for authorizing payments to GSAs.
Abeysekera was questioned on whether her division raises questions when payment authorizations were requested from GSAs which had been appointed without a financial review.
“Industry Affairs has to request for documents from GSAs.”
“According to our guidelines, the responsibility for conducting the review lies with the department that the agreement originates from,” she said.
She was asked whether she was aware of the contents in the Industry Affairs division manual.
Abeysekera said she was.
“There’s a contradiction in the two manuals,” she admitted.
She said no employee has ever informed the director board of the loophole.
The commission of inquiry was informed by earlier witnesses that SriLankan had signed GSA agreements with companies which were in poor financial position, and in the limited number of cases when the required financial reviews were done, the recommendations were ignored.
The airline had also continued to increase commissions for GSAs not achieving set targets. Commissions were also increased without justifiable reasons, the commission heard.
There was no mechanism for regular review of GSAs until guidelines were changed in 2015, witnesses said. Before then, the GSAs were reviewed only when their agreements were up for renewal. Contracts were extended even when targets were not achieved, the commission heard.
Then Chairman Nishantha Wickramasinghe and then chief executive Kapila Chandrasena had interfered with the process of appointing GSAs, which were done in at least one case with outside influence, the commission heard.
Abeysekera testified that the Management Accounting division of the airline had done a one-off cost-benefit analysis of four GSA territories in 2014, and found that converting SriLankan offices to GSAs had been beneficial in Singapore and Malaysia, and worse-off for the airline in Dubai and Bangkok.
“The general understanding is GSAs are better because of less administrative costs, but a cost benefit would have helped to identify that,” she said, adding that such studies could have been done at the stage of converting country offices to GSAs. (Colombo/Sept06/2018)