Loaded with losses Mihin to start flights to more destinations

Wednesday, 28 November 2012 02:49 - - {{hitsCtrl.values.hits}}

Flying with losses and fat hopes for a profitable landing, State-owned Mihin – dubbed the ‘whimsy carrier’ – will be adding Madurai as its newest destination next month.

As per Parliamentary Committee on Public Enterprises (COPE) sources, the cumulative loss of Mihin Lanka since its inception in 2007 is a staggering Rs. 8.5 billion with last financial year’s (2011/12) figure being Rs. 1.9 billion.

Notwithstanding the growing financial burden to the State, the Budget carrier, airborne out of a dream of President Mahinda Rajapaksa, recently acquired the third new aircraft on lease to improve its services, efficiency, and cost. It is also planning regular flights to Madurai from 7 December.

Sources said the Madurai flight will benefit the large number of relatives of Sri Lanka’s Indian-origin plantation Tamils living in the Indian city. Currently they fly to Trivandrum or Trichy and travel on land from there to reach Madurai.

An Airbus 321 aircraft with 212 seating capacity will be operated three days a week on Monday, Wednesday and Friday between Colombo and Madurai.

The flight will depart Madurai at 4:25 p.m. and reach Colombo at 5:30 p.m. A one-way fare on the flight will be Rs. 5,100 and Rs. 8,000 for a round trip.

Mihin Lanka now operates flights to destinations Bodhgaya, Varanasi, Trichy, Dhaka, Jakarta, Dubai, Sharjah and Bahrain.

The airline plans to rapidly expand its services to New Delhi as well as Kathmandu within the next few months.

The serious losses of Mihin and the Auditor General’s Report came up for discussion at COPE meeting on Friday.

The Auditor General has observed that such heavy losses have been incurred by Mihin during past last five years despite grants and concessions by the Government amounting to over Rs. 6 billion.

The Treasury granted Rs. 507 million in 2011/12, Rs. 406 million in 2010/11, Rs. 1,508 million for 2009/10, Rs. 2,882 million for 2008/09, Rs. 500 million for 2008/9 and Rs. 250 million for 2007/8.

The loss sustained for the financial year 2007/2008 was Rs. 3.1 billion; Rs. 1.3 billion for 2008/2009; Rs. 1.2 billion for 2009/2010; Rs. 940 million for 2010/2011 and Rs. 1.9 billion for 2011/2012.

The Auditor General had observed that although the company is running at a continuous loss, the annual remunerations paid to the six-member Board of Directors have increased over the years.

Rs. 11 million has been paid to Directors as remunerations last year – an increase on the Rs.4.9 million paid for the previous year.

According to the Auditor General’s report, the Mihin Lanka Chief Executive Officer (CEO) who is also the CEO of Sri Lankan Airlines is paid Rs. 500,000 a month by each of the institutions as remuneration.