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Monday March 4th, 2024

SriLankan likely to see pilot shortage in 2023 amid economic crisis, tax hikes – sources

ECONOMYNEXT – State-run SriLankan Airlines is likely to see a shortage of pilots around March 2023 as many trained local pilots working in the national carrier are moving for lucrative offers in Qatar Airways and Emirates amid an unprecedented economic crisis and tax hikes, sources who are aware of the move said.

“We may see an over staff in December before suffering a shortage around March 2023,” a source who is aware of the migration told EconomyNext.

“The pilots have been joining both Qatar Airways and Emirates since the crisis was on. However, many pilots have now started applying for job vacancies in these two airlines after the latest tax hike proposal,” the source said.

Officials at SriLankan Airlines were not immediately available for comments, but an official said the national carrier is in the process of returning six A320-300 to the owner after the end of lease period, but the airlines expected to lease at least six again in the near future. The official who did not want to be named also said only “a few” pilots have joined the Middle Eastern carriers so far.

A second source who is close to pilots said the removal of six flights will create an over staff in December.

“But nearly 40 pilots are facing interviews to join one of these airlines,” the source said adding that at least 20 percent of of the over 200 pilots in SriLankan is expected to leave.

“Most of these pilots will leave before March 2023.”

Many pilots have been looking for a break since the unprecedented economic crisis started early this year in Sri Lanka, the sources said.

“With the tax hike, pilots will have to pay over 30 percent tax and salaries in Middle Eastern airlines are tax free,” the first source said.

The Sri Lankan government revealed the new tax hike proposals last week which will see individuals who are earning more than 100,000 rupees being taxed as high as 36 percent after certain tax slabs.

In February this year, SriLankan Airlines pilots held a “Fly for Roster” campaign where they stopped working on off days demanding quick solutions to their grievances including lower dollar exchange rate used to calculate their salaries.(Colombo/Oct17/2022)

Comments (2)

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  1. EMILYJOACK says:

    FOR GOODNESS SAKE, CLOSE IT DOWN IMMEDIATLY, ENOUNG IS ENOUGH

  2. SDS says:

    While tax is only one reason the main reason is that Sri Lankan airlines Pilots have been short paid for over two years by converting USD of pilots salaries at 225 LKR per USD which is illegal.
    Over 30 pilots have already resigned

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Your email address will not be published. Required fields are marked *

  1. EMILYJOACK says:

    FOR GOODNESS SAKE, CLOSE IT DOWN IMMEDIATLY, ENOUNG IS ENOUGH

  2. SDS says:

    While tax is only one reason the main reason is that Sri Lankan airlines Pilots have been short paid for over two years by converting USD of pilots salaries at 225 LKR per USD which is illegal.
    Over 30 pilots have already resigned

Sri Lanka rupee opens at 308.20/50 to the US dollar

Sri Lanka stocks reversed its falling trend and gained for the first time in six sessions on Tuesday closed stronger on Tuesday (21).

ECONOMYNEXT – Sri Lanka’s rupee opened at 308.20/50 to the US dollar Monday, from 308.80/90 on Friday, dealers said.

Bond yields were broadly steady.

A bond maturing on 01.08.2026 was quoted stable at 10.90/11.00 percent.

A bond maturing on 15.09.2027 was quoted at 11.90/12.00 percent from 11.90/12.05 percent.

A bond maturing on 01.07.2028 was quoted at 12.20/30 percent from 12.15/35 percent.

The Colombo Stock Exchange opened up; The All Share was up 0.60 percent at 10,755, and the S&P SL20 was up 1.24 percent at 3,077. (Colombo/Mar4/2024)

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Sri Lanka central bank swaps top $3.2bn by December

ECONOMYNEXT – Sri Lanka’s central bank borrowed US dollars from various counterparties through swap transactions, which had topped 3.2 billion US dollars by December 2024, official data show.

The net short position, including swaps disclosed by the central bank, grew by over almost 1.28 billion US dollars from December 2022 to 3,280 million dollars.

The gross position grew from 2,263 million dollars to 3,280 million US dollars over the year.

The central bank supported some state banks with dollars to cover their dollar exposures, which had since been paid back.

By December reported gross reserves of the central bank was 4,491 million US dollars, against swaps of 3,280 billion US dollars.

Swaps of around 1500 related to the People Bank of China.

Swaps allow a central bank to increase gross reserves, without raising domestic interest rates.

Swaps with domestic counterparties lead to liquidity being injected into money markets, which can be mopped if domestic credit growth is moderate.

At the moment many private banks have large dollar positions invested outside the country, which cannot be used for transactions domestically because of a money monopoly given to macro-economists. (Sri Lanka repays debt or collects reserves of U$5bn via banking system since rate correction)

However unwinding swaps after private credit has picked, or engaging in swaps after private credit has picked up, may lead to money being injected to maintain the policy rate, leading to excess credit by banks and balance of payments deficits and or currency collapses, analysts say.

Central bank swaps in the third quarter of 2018 led to a collapse of the currency under the ‘exchange rate as the first line of defence’ policy peddled to Sri Lanka, critics have said earlier.

Domestic currency proceeds of swaps were the primary ammunition to bust East Asian currencies in 1997-98.

Any depreciation after the swap proceeds have been used for imports (effectively mis-targeting rates) a central bank will run a forex loss.

The PBOC however had put a rule, preventing the use of the swap after gross reserves fell below 3 – months of imports, preventing Sri Lanka from getting into further trouble through the use of official reserves for private imports.

Sri Lanka’s central bank also used borrowings from the Reserve Bank of India, via the Asian Clearing Union to run BOP deficits.

Losses from exposed dollar positions of central banks which have gained ‘independence’ from fiscal rules and parliaments and engaged in macro-economic policy, including the Fed, have led to taxpayers bearing the losses in the end.

Swaps were invented by the Fed in the early 1960s, as it deployed macro-economic policy (printed money for growth) threatening its gold reserves and the Bretton Woods system.

Sri Lanka has other borrowings also, including from the IMF, which has made net foreign assets of the central bank negative. (Colombo/Mar05/2024)

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Sri Lanka loses MICE tourists to Thailand on minimum room rates

ECONOMYNEXT – Sri Lanka has lost Meetings, Incentive Travel and Exhibition travelers to competitors in East Asia and India due to minimum room rates as higher standard rooms were available in other countries at lower prices, industry officials said.

President of the Sri Lanka Association of Inbound Tourist (SLAITO) Nishad Wijetunga said they the industry managed to retain a majority of booking made before the minimum room rates were imposed by the state last year.

“However, there were MICE groups that were supposed to come and cancelled Sri Lanka and went to places like Thailand and other parts of India and we lost,” Wijetunga told EconomyNext.

“We know that large groups of MICE (tourists) are affected.”

India is a key source of MICE tourists to Sri Lanka.

Sri Lanka’s businesses have got used to protectionism and try to push up prices with import taxes to extract more money from customers using the coercive power of the state, with tiles and steel being among the most prominent examples.

RELATED: Stand-alone hotels unviable in Sri Lanka due to high construction, capital costs

High priced tiles and steel in turn makes hotels expensive to build and make the leisure industry less competitive, analysts say.

However, in tourism, unlike in building materials customers are not trapped within the country and are free to move to other markets.

Managing Director of CEC Events and Travels, Imran Hassan, said the industry lost groups to East Asia due to minimum room rate.

In one instance, an operator was in discussions to get a group of 900 passengers.

“And that moved out to Thailand,” Hassan said. “Like that, there are many instances that the minimum room rate was not conducive.”

Thailand in 2023 attracted 28.04 million tourists.

A group that used to come to Sri Lanka annually used to take 40 to 50 five-star hotel rooms. This time Sri Lanka competed by offering lower standard.

“This year, they’re only giving 10 rooms to the five-star hotels,” Hassan explained. “They are staying in smaller hotels because they can’t afford it because it has become so expensive.”

“But overall, we are working with the authorities to correct it.

“We don’t mind demand and supply situation taking the rates up as in the Maldives. But what we are saying is keep an open market.”

RELATED : Sri Lanka should say good bye to minimum room rates: President

President Ranil Wickremesinghe has said Sri Lanka cannot progress with protectionism and the country has to learn to face competition. (Colombo/Mar04/2024)

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