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Wednesday, 24 September, 2008, 18 : 00 PM [IST]

Sri Lanka may buy six Chinese aircraft to revive state-run budget airline, Mihin Air

Sri Lanka government is putting in place a corporate plan to revive its budget airline, Mihin Air for which it will procure six Chinese-built aircraft by year end, according to a PTI report. "We have sought the cabinet's approval to purchase new aircraft from China in the upcoming budget," informed Chamal Rajapaksa, Minister of Ports and Aviation, Sri Lanka. He further said that the government will take steps to resume operations of Mihin Air by December utilising state-owned aircraft purchased from China. The government has submitted a cabinet paper to allocate 3.7 billion rupees to purchase six aircraft from China.

Rajapaksa told Sri Lankan Parliament yesterday that the plans will be first submitted to the Parliamentary Consultative Committee for further consultation. He admitted that administrative failure led to the suspension of Mihin Air and promised that an efficient management will be appointed. "Mihin Lanka was established with good intentions, but it ended in disaster because of several mistakes that were made. We have studied our mistakes and I'm sure we can make this a profit making venture," stated Rajapaksa. According to him the plan for the revived airline will focus more on internal and short distance travel in the future.

Meanwhile, opposition members said they feared the airline will continue making losses. Its operations were suspended on account of incurring a loss of 3.2 billion (Sri Lankan) rupees after it was launched in April last year. As per estimates, the airline incurred losses of roughly 7,000, 5,000 and 4,000 Sri Lankan rupees per passenger flying to Dubai, Maldives and Bodh Gaya (India) respectively. During its tenure of operations it is estimated to have lost Rs 1.22 billion because of subsidies.

"We have noted a dramatic public trend in domestic airline services and these newly imported aircraft will be used to furnish that demand," said Rajapaksa. Elaborating on the new structured plan to resume operations of Mihin Air, Rajapaksa said, "We will select the best corporate plan out of several and implement it in December." He further added that though the airline was bankrupt, Sri Lanka had the Air Operations Certificate (AOC), which could be sold to recover the loss. "But, we do not follow the policy of selling state property," Rajapaksa commented. According to him a competent management team will be appointed as the new Board of Directors. Rajapaksa also revealed that plans are underway to provide air tickets to migrant workers at concession rates.
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