SriLankan ignored extra fuel cost due
to weight of inflight duty free items

By Rathindra Kuruwita

SriLankan Airlines management had not taken into account extra fuel costs due to transporting large stocks of inflight duty free items, Rashmore Ferdinands, Manager Inflight Services, Administration and Duty Free yesterday told the Presidential Commission of Inquiry (PCoI) on irregularities at SriLankan Airlines, SriLankan Catering and Mihin Lanka.

Last week Marlon Perera, former Director of Sales and Development of Phoenix Duty Free Services, concessionaire for inflight duty free services for both SriLankan and Mihin Lanka, told the PCoI that if the management had not taken the extra weight into consideration, the ‘profits ‘ made by inflight duty free sales would have got wiped out.

"At the time we entered into the agreement such things were not taken into consideration. Pinpoint focus on such matters was a subsequent development," he said.

Ferdinands also added that when SriLankan was running its own inflight duty free promotions programme it always purchased duty free items from the primary manufacturer or an authorised agent. However, the agreement SriLankan had entered into with Phoenix Duty Free Services didn’t specify who the company can purchase duty free products from.

Although a concessionaire usually delivered the items it procured for an airline directly to a bonded warehouse, Phoenix seemed to have delivered certain items from one of its warehouses in Singapore, Ferdinandas said.

"There were certain supplies coming from Singapore that we could have only purchased from an authorized reseller."

Last week Marlon Perera said that Phoenix Duty Free Services had violated the agreement it had signed with the two airlines and the Customs ordinance. "According to the agreement, Phoenix has to obtain duty free items on behalf of SriLankan and deliver them to a bonded warehouse in Sri Lanka. The return items also had to be delivered straight to the supplier. Phoenix can’t take duty free goods to a third location. If the supplier had got to know it he would have been able to sue SriLankan for millions of dollars. But Phoenix held those goods in its warehouses in Singapore. This is a serious violation of the agreement as well as the Customs laws."

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