Sri Lanka’s budget airline Mihin Lanka stops flying for want of aircraft

16 May, 2008: Mihin Lanka, a low-cost airline based in Colombo, Sri Lanka, and fully owned and funded by the Sri Lankan government, has suspended operations indefinitely.

Mihin, already cash-strapped, thus joins a long list of airlines that have recently stopped operations worldwide.

Mihin Lanka was compelled to take this hard decision for want of aircraft, The Sunday Times, Sri Lanka’s English-language Sunday newspaper, reported.

Parakrama Dissanayake, chief of Sri Lanka’s civil aviation, was quoted as saying: “Mihin Lanka does not have an aircraft to fly passengers since the beginning of May 2008. Passengers booked to travel are now being transferred to other airlines until Mihin finds another aircraft.”

Officials at Mihin Lanka’s call center said that “all scheduled flights for May have been temporarily suspended for technical reasons” when asked about the status of the airline. However, one official at the airline said that they hoped to resume services in June.

Sajin Vaas Gunawardena, chief executive officer of the struggling airline, had resigned in April 2008, but remained as a member of the board of the carrier.

A few days ago, the low-cost airline’s last aircraft, an Airbus A-321 taken on wet lease from BH Air, based in Bulgaria, was reclaimed by its owners, along with all the staff of the aircraft, equipment and stores.

The Sunday Times quoted a source as saying that at Mihin, which incurred billions of rupees in debt in its first year of operation, was unable to pay BH Air to renew the lease.

Mihin Lanka, which began operating in April 2007, has stopped flying just one year later. It started with a working capital of $5 million, and had scheduled services to the cities of Trivandrum and Tiruchirapalli in India, Dubai, Male, Bangkok and Singapore.

Media reports in Sri Lanka said, the airline, named after President Mahinda Rajapaksa, was invested mainly by the pension funds of government employees and was managed by the President’s close confederates. The venture failed because of “extravagant and ineffective management,” according to sources.

The airline has been recently exploring markets in Europe and India in an effort to acquire new aircraft on a dry lease and at a lower cost.

According to The Sunday Times, unconfirmed reports said that representatives of Mihin Lanka have returned to Sri Lanka after selecting two 19-year-old aircraft in France.

However, the newspaper quoted sources in the government as saying that, under Sri Lanka’s aviation regulations, aircraft aged over 15 years will not be registered in the country.

In fact, a few months ago, Mihin Lanka had obtained two new buses as well as took on lease ground handling equipment for US $223,000 a month. But these have been idling at the Bandaranaike International Airport at Colombo for the past two months.