Sri Lanka to ground ex-president's 'vanity airline'

COLOMBO: Sri Lanka will scrap an airline set up by the country's strongman former president and widely seen as a vanity project, with the national carrier set to take over its routes, an official said Wednesday.

Budget carrier Mihin Lanka was founded by Mahinda Rajapakse in 2007 but operated at a huge loss.

SriLankan airlines chairman Ajith Dias said the flag carrier would cover flights to all destinations serviced by the airline, which officials said had accumulated losses of $117 million.

"By the end of the year, there will be no Mihin Lanka and we (SriLankan airlines) will be servicing the routes they operated," Dias said in Colombo at the opening of a new call centre for the national carrier.

Mihin, which operates four Airbus aircraft to several Indian cities as well as Bangladesh, Indonesia, the Seychelles, the Maldives and Bahrain, is expected to cease flying by the end of 2016.



The former president launched Mihin to compete with SriLankan airlines, which was then part-owned and managed by Dubai's Emirates airline, amid personal disagreements with the national carrier's managers.

The Emirates deal was cancelled in 2008 after SriLankan refused to bump fare-paying business-class passengers to economy and give their seats to members of Rajapakse's family, who were returning from London.

A furious Rajapakse removed the Emirates-appointed CEO of SriLankan from his post and replaced him with his brother-in-law.



SriLankan airlines has also sunk into the red since the Emirates deal ended, with an estimated debt of $3.2 billion.

Other vanity projects launched by the former president include an international airport in his constituency in the island's south. It is widely regarded as a white elephant, with only one airline using it.

An investigation is underway into a $2.3 billion deal to buy Airbus aircraft during Rajapakse's presidency over graft allegations.

The mounting debt crisis at SriLankan has forced the government to seek international partners to inject capital and manage the airline.