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Airlines
lenders starting point in determining the value of its collateral is the price
stipulated in the manufacturers consent. The purchase price in the
manufacturers consent will in most cases be determined by a US Dollar
denominated amount at the time of execution. It will escalate until delivery
in terms of the agreement.
The new aircraft A321 neo is one of the most advanced and versatile
commercial aircraft in the market. Sri Lankan has ordered four of them but
not direct from the manufacturer. [Viet Jet Air has ordered 21 of them from
the manufacturer.] Designed to meet ongoing advances in technology, the
manufacturer Airbus has 1,052 firm orders out of a total of 4,300 of the
A320 family. Hence the qualifier Neo New Engine Options.
It can fly transatlantic from Europe to the US East Coast. How will SriLankan
Airlines fit them to its restructured and repositioned route network? The
manufacturers blurb tells us that the A321 offers the best seat mile cost of
any single-aisle aircraft and seating capacities comparable to that of a wide
body jetliner. If so, it offers a combination of possibilities. But that calls for
imagination beyond housemaid and diaspora traffic.
Getting back to the basics
Switzerland and Belgium, two developed nations, decided that they will not
resuscitate their flag carriers Swiss Air and Sabena. In the process they did
not diminish in terms of global connectivity. What we need is the
imagination to get back to the basics. There is no logic in operating routes
at a loss to keep hotels occupied. Paradise is better off without visitors
whose travel is subsidised by the National Airline.
The rule that we need to fly to London seven days a week is not cast in
stone. If the seven slots in the Mother Country are so precious, it would not
be too difficult to find a competent carrier to operate the route ColomboLondon as Singapore Airlines did with its Concord service with British
Airways. The aircraft was repainted with the Singapore Airlines livery on the
left side and BAs on the right side. There are plenty of ways to carry the
flag suffering no first degree burns.
The Minister of Finance and the Prime Minister should heed the advice that
Warren Buffet gave his shareholders: The worst sort of business is one that
grows rapidly, requires significant capital to engender the growth, and then
earns little or no money. Think airlines. Here a durable competitive
advantage has proven elusive ever since the days of the Wright Brothers.
Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would
have done his successors a huge favour by shooting Orville down.
Posted by Thavam